Tesla stock soars as Musk taunts the SEC with a tweet

01 October, 2018, 19:41 | Author: Gerard Cortez
  • Elon Musk to Resign as Chair of Tesla Board but Remain CEO

Tesla CEO Elon Musk reaches a settlement with the Securities and Exchange Commission after the agency filed a lawsuit against him; Facebook accounts of 50 million people have been compromised by hackers.

Tesla's shares soared 16% on Monday after chief executive Elon Musk settled a fraud lawsuit with the United States regulator.

Musk and Tesla were also fined $20million each.

Tesla shares sank last week after the SEC accused Mr Musk of securities fraud, opening up the prospect of a long-drawn out fight that could have seen Tesla lose its leader, undermine its ability to raise capital and cripple operations.

Musk's "funding secured" tweets were made on 7 August, and claimed that he was planning to take the company private at a price of $420 per share - a premium of just over 20 per cent of the company's stock price (which has since nose-dived) at the time.

"We believe Musk's settlement with the SEC is positive for all stakeholders and should allow TSLA to return its focus to producing quality cars", Baird analyst Ben Kallo said. According to SEC, this settlement will assist Tesla to strengthen its corporate governance and protect its investors.

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Musk and Tesla will each pay $20 million under the settlement, the SEC said in a statement Saturday. Tesla shares plummeted 14% on Friday, the biggest drop in nearly five years. The electric car-making company must also appoint two new independent directors to its board, establish a new committee of independent directors and implement additional oversight of Musk's future communications. Musk won't be eligible to be re-elected as chairman for three years.

From the beginning of this case, the SEC requested as a penalty that Elon Musk had left the position of chairman from the board of Tesla, something that has now been achieved.

He accepted the deal with the SEC "without admitting or denying the allegations of the complaint", according to a court document.

After filing the lawsuit, SEC officials were anticipating a drawn-out legal battle, but settlement talks started up again late Friday after Musk's attorney Steven Farina sent an email asking to reopen the discussions.

Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.

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