Posted by Paul H. Duffy.
Ever since Elon Musk tweeted on August 7th about the possibility of taking his company private he has been in deep trouble with the SEC. He made a series of tweets about the potential move saying funding was secured for $420 a share. After a few weeks, the SEC began to file a lawsuit against Musk after he backed out of the decision. The SEC claimed he misled investors and manipulated stocks. Initially Tesla and Musk were ready to fight the suit but a few days later things changed. “Elon Musk reached a settlement with the Securities and Exchange Commission that allows him to remain chief executive of Tesla Inc. but requires that he step aside from the chairman role for three years,” (Higgins and Michaels). The agreement also included a $20 million fine. Tesla also decided to make changes, “Tesla has agreed to appoint two new independent board members, establish a new committee of directors and create controls to oversee Mr. Musk’s communications, according to the SEC,” (Higgins and Michaels).
This isn’t the first time Tesla and Musk are in trouble with the SEC. Last year, the SEC began probing Tesla about misleading investors over the production of their newest model the Model 3. “As production started, he claimed about 1,600 cars would be made in the third quarter of 2017 before reaching 20,000 in December. Those forecasts were far below what he predicted roughly a year earlier, when he said as many 200,000 Model 3s would be made in the second half of 2017,” (Michaels, Glazer, and Higgins). While no official charges have been filed, the SEC has probed into Tesla’s manufacturing data. However, it will be difficult to prove Musk and Tesla intentionally tried to mislead investors. “Tesla already faces private litigation in a San Francisco federal court, where a group of investors alleged the company misled investors about how quickly it could ramp up Model 3 production,” (Michaels, Glazer, and Higgins). Tesla is fighting this saying they disclosed problems in a timely manner.
While Musk is a very famous and popular business owner, these problems seem to start adding up. Musk shows that tweeting business announcements on a personal account can create a grey area. Was his tweet an official business announcement or just a personal idea? Tesla is known as the company of the future and in the long run they will be stable and making profit. But with this increased production problems, Tesla could see their business really start going backwards. Time is of the essence especially as other established companies are moving into the electric car market. Time will tell if Tesla can right the ship.
Paul is business management major at the Stillman School of Business, Seton Hall University, Class of 2021.
Sources:
https://www.wsj.com/articles/sec-pressing-tesla-directors-for-details-on-communications-with-elon-musk-1534450010
https://www.wsj.com/articles/elon-musk-can-remain-tesla-ceo-but-must-step-down-as-chairman-in-sec-settlement-1538257394
Posted by Chris Jaramillo.
This article from CNBC dated February 1, 2017 states Volkswagen rigged many of their automobiles that have larger diesel engines to cheat and pass emissions tests. Wolfsburg-based Volkswagen has admitted it equipped diesel engines with software that turned the emissions controls off during every day driving which resulted in cars emitting 40 times the US limits of nitrogen oxides. This pollutant is very harmful to people and about 11 million cars worldwide have the deceptive software.
In a settlement Volkswagen has agreed to pay anywhere from $1.2 billion to as much as $4 billion in buybacks and compensation to settle the claims. About 78,000 Audi’s, Volkswagen’s, and Porsche’s with 3.0-liter diesel engines are involved. The proposed settlement was filed before Judge Charles R. Breyer in US District Court in San Francisco. Previously, about 500,000 smaller 2.0-liter diesel engines were also rigged to cheat and pass emissions tests and Volkswagen agreed on a $15 billion in that settlement. The head of Volkswagen Group of America, Hinrich J Woebcken stated “all of our customers with affected vehicles in the United States will have a resolution available to them. We will continue to work to earn back the trust of all our stakeholders.” Owners of older models from 2009-2012 will be offered buybacks or trade-ins because they cannot be fixed to pass the emissions tests. They will also be monetarily compensated according to a statement from the owners’ attorneys.
The US environmental authorities must approve Volkswagens proposed repair and the deal must still get court approval to take effect. Many German investors are suing the company saying that were not informed in a timely manner and Volkswagens shares plunged drastically. Even though the company’s reputation took a beating sales didn’t stop and they passed Toyota last year to become the world’s largest carmaker by sales.
Chris is finance and marketing major at the Stillman School of Business, Seton Hall University, Class of 2019.
Posted by Catherine Caldwell.
The trendy new and convenient company, Uber Technologies Inc., is currently enduring a legal battle for its illegal classification of freelancers. Uber was founded in 2009, as an application that acts as an electronic link from individuals who have cars to individuals who needs rides. The company has received a reputation of convenience to its customers and an easy way to make profit for its drivers. However, attorney Shannon Liss-Riordan, a powerful attorney in the state of California, disagrees with the classification of Uber drivers.
Shannon Liss-Riordan is no stranger in her attack on large billion dollar industries such as Uber. She has made cases against Starbucks, Harvard University and FedEx, to name a few. Ms. Liss-Riordan thinks that Uber drivers are unlawfully “on-demand workers” with no benefits. Instead of freelancers, Uber drivers should receive employee status, which would include drivers receiving reimbursement of their transportation expenses among other employment protective benefits.
As a software intermediary in the transportation business, Uber Technologies Inc. claims that they do not need grounds for titling their drivers as employees. Uber does not have a “fleet of drivers” waiting to pick up the next customer, but is based on convenience for both the drivers and employees. Uber does not plan on settling the case and has begun their approach by assembling 400 statements from drivers saying they were content with the flexible labor opportunities. However, in retaliation, Liss-Riordan took 50 of those statements and found that those drivers stated they would like to have official employment status.
In September, the case won class action status in San Francisco and will continue in federal court. Valued at $51 billion and is willing to fight for their case all the way to the Supreme Court and are unwilling to settle.
This case will create a precedent in the industry of software application employment services, and therefore needs to be handled very tactically. The basic labor protection laws should not be ignored due to new forms of introducing a business such as Uber. However, each Uber driver participates to make profits on their own agenda. Some use the service for extra cash, where others, in the grueling unemployment climate, use Uber as full time opportunities. In my opinion, the court should require Uber to create employment contracts with Uber drivers who can prove that it is a major source of income.
Catherine is a finance and information technology major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Elizabeth Wang.
Did you know that all the Apple employees had to show their bag(s) to store security while entering and exiting to and from their stores? Even on their breaks, they have to go through security screening. Former employees, Amanda Frlekin and Dean Pelle, initiated a class action lawsuit against Apple. It included 12,000 past and present workers among 52 stores throughout California.
This past July, the lawsuit was granted class-action status in San Francisco by U.S. District Judge William Alsup. The lawsuit claims that “Apple’s policy was demeaning and embarrassing and made them feel like they were being treated as criminals.”(Williams). Also, employees lost time standing in line for the security surveillance.
These searches were not avoidable. Apple’s claimed that employees were advised to opt to come in to work without bags to avoid this activity, and “the searches were so quick, there’s no need to pay out” (Williams).
Although they claim they lost time going through this security check, Apple does not have a better solution for this issue. I guess it is a theft prevention because their devices are small and expensive. The judge had granted the filing but had dismissed the lawsuit for now.
Elizabeth is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2016.
Sources:
Judge bins Apple Store end-of-shift shakedown lawsuit[1]
Apple Class Action Lawsuit Is Dismissed[2]
Ex-Apple bods suing Apple for bag searches get class …[3]
[1] Fiveash, K (2015). Judge bins Apple Store end-of-shift shakedown lawsuit … Retrieved November 13, 2015, from http://www.theregister.co.uk/2015/11/09/judge_dismisses_apple_store_shift_shakedown_lawsuit/.
[2]Reuters (2015). Apple Class Action Lawsuit Is Dismissed – The New York … Retrieved November 13, 2015, from http://www.nytimes.com/2015/11/09/technology/apple-class-action-lawsuit-is-dismissed.html.
[3]Williams, C (2015). Ex-Apple bods suing Apple for bag searches get class … Retrieved November 13, 2015, from http://www.theregister.co.uk/2015/07/17/apple_store_class_action/.