Published: Wed, October 03, 2018
Finance | By Kristine Clayton

Tweet storm: Musk quits as chairman over false claims

Tweet storm: Musk quits as chairman over false claims

Elon Musk may be starting to put those take-private tweets behind him, but his fortune will need more time to recover despite a big boost on Monday.

ELON MUSK has agreed to resign as chairman of Tesla and to pay a $20m fine in order to settle charges of securities fraud. The SEC stated that his plans to make Tesla a private company have misled investors, resulting in Tesla stocks to tumble.

Investors were concerned a protracted legal battle and the loss of the charismatic chief executive could cripple its ability to raise money and ramp up production of its Model 3 sedan. As part of the settlement, both the company and Musk have been fined US$ 20 million each.

After falling 14 percent on Friday, the stock rose 17 percent today, leaving the closely watched price at $310.70 at the close.

Late last month, Electrek reported that Tesla had already broken its record ahead of the third quarter's close, adding that the company is set to exceed its guidance of 50,000 - 55,000 Model 3s.

The numbers initially lifted Tesla shares but they fell later as investors anxious about the company's warning that a 40-percent tariff on Chinese imports of its cars was blocking sales in the world's biggest electric auto market.

Tesla produced over 5,300 Model 3 cars in the last week of September, falling short of its target of 6,000.

Deliveries reached a record 83,500, above Wall Street estimates of 80,000 and including nearly 56,000 of the Model 3 sedan whose ramp-up is widely seen as crucial to the company's drive to become profitable. The SEC also filed papers that charged Tesla with failing to exercise proper oversight over Musk's actions and laid out a separate settlement of those charges. He'll also not be eligible to be elected into the Chairman position for three years, Time reports. Secondly, the company's board will also appoint two new independent directors, with a new committee dedicated but not limited to regulating Musk's communications as he remains CEO. "The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", said Steven Peikin, co-director of the SEC's Enforcement Division. It appears that future production goals are reportedly 6,000 per week and eventually 10,000, which CEO Elon Musk targeted as a company goal by the end of 2018.

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