Published: Tue, October 02, 2018
Finance | By Kristine Clayton

Tesla Shares Soar After Elon Musk's SEC Settlement


Under the agreement - which Clayton said was "in the best interests of our markets and our investors, including the shareholders of Tesla" - Musk will be ineligible to serve as chairman of the board for a period of three years and will be replaced by an "independent chairman", according to the SEC. 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.

Tesla and Mr Musk will pay $20 million each to financial regulators.

Tesla has turned to an army of volunteers to help it meet ambitious third quarter auto production targets after a bruising few days for chief executive Elon Musk, who was forced to pay $20m in order to settle a dispute with USA regulators.

The SEC said Musk's statements on Twitter were "false and misleading" and that he had never discussed the plans with company officials or potential funders. Munster pointed out that the terms of the settlement actually works in Tesla's favor, as the appointment of a new, capable Chairman of the Board could help Tesla reach sustainability, as well as become the wake-up call that Musk needs with regards to his behavior online. Shares of Tesla had plunged Thursday following the announcement that the SEC had sued Musk. Musk and Tesla each will pay a penalty of US$20 million, with the total US$40-million penalties to be "distributed to harmed investors under a court-approved process".

Stephanie Avakian and Steve Peikin, co-directors of the SEC's Enforcement Division, led the talks, taking the reins from the staff attorneys who worked the case, according two people familiar with the matter.

However, Musk has agreed to a condition where he will not admit nor deny if he was guilty of committing the securities fraud.

Tesla analyst Garrett Nelson of CFRA Research upped his rating on the stock Monday morning to Hold, after downgrading it on Friday to Sell.

It ends a case that began in August, shortly after the publications made by Elon Musk and that ended up not having any progress, and the company maintained its position in the stock market. On Saturday, the SEC released an update announcing that Musk had accepted a settlement for his lawsuit.

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