“It’s a very serious accusation,” said Thomas Gorman, partner at Dorsey & Whitney and a former SEC staffer.
Coffee said in theory a judge could issue Musk a “lifetime” ban, permanently preventing him from serving as a corporate officer or director. Although the SEC did not request a specific time frame, it typically settles for less than a lifetime ban.
Martha Stewart’s 2006 settlement with the SEC over insider trading barred her from serving as CEO or chief financial officer of any public company for five years.
The SEC clearly wanted to use this extremely high-profile case to make a point: Corporate executives can’t make statements with little regard to their accuracy.
“The SEC has already accomplished their objective: To get the headlines. And boy, did they get it,” said Randall LaSalle, a professor at the John Jay College of Criminal Justice.
What happens next?
Typically, these matters are resolved in a settlement. It’s unusual that the dispute wasn’t resolved prior to the SEC’s lawsuit.