Published: Tue, October 02, 2018
Business | By Eloise Houston

Tesla shares surge after Elon Musk settles with SEC

Tesla shares surge after Elon Musk settles with SEC

Tesla Inc. shares rebounded from last week's US lawsuit over Elon Musk's take-private tweets, as a settlement ensured the billionaire will keep calling the shots at the carmaker he's said is on the verge of profitability. Musk will remain as CEO of the firm, which will also pay a penalty of $20 million. He is staying on as CEO, but gives up his chairmanship.

Investors are cheering Tesla's deal with the SEC that keeps Elon Musk as the CEO. The regulator decided that Musk "knew or was reckless in not knowing" about false information contained in his posts.

Shares of Tesla jumped during Monday's trading session, after falling on Friday over concerns the billionaire businessman would be ousted from his leadership roles.

These 7 tweets about taking the company private have proven to be pricey enough and Tesla and Musk combined have to pay a hefty price of $40 million to settle the case.

As part of the settlement, Tesla will appoint an independent chairman, two independent directors, and a board committee to set controls over Musk's communications under the proposed agreement. The agency backed off from ousting him as chief executive officer.

The charges come after Musk claimed in August via a series of tweets that he was planning to take the electric auto maker private, and implied that such a move was imminent with "funding secured".

The move brings a conclusion to the SEC fraud charges over his infamous "funding secured" tweet.

However, SEC alleged that Musk has duped investors since he was completely aware of the fact that the potential transaction wasn't that secure.

Neither Musk nor Tesla admitted or denied the SEC's findings as part of the settlement, which still must be approved by a court.

Stephanie Avakian, the co-director of the SEC's enforcement division, said: "The total package of remedies and relief are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors". The basis of the SEC's suit was that Elon didn't have funding secured at all and was potentially misleading investors.

Tesla's stock value ballooned when Musk tweeted about the idea, but then deflated when the plan fizzled out.

Like this: