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Tesla shares jump as SEC settlement leaves Musk in CEO role

01 October, 2018, 18:07 | Author: Sara Gill
  • Elon Musk to leave Tesla chairman role and pay £15m fine after fraud case | ITV News

The settlement involved a hefty fine worth a total of $40 million, as well as Musk's resignation as Chairman for Tesla's Board of Directors, but it did allow him to keep his post as CEO.

Two new independent directors will be appointed to the board and a new committee of independent directors will be expected to put in place additional controls and procedures to oversee Musk's communications.

Musk will remain Tesla CEO after settling SEC fraud charges over his infamous "funding secured" tweet about taking the vehicle firm private.

The electric auto maker is expected to report third-quarter production numbers on Tuesday, following a period of turbulence, including a run-in with securities regulators that culminated in Musk being ousted as Tesla's chairman and hit with a multimillion-dollar fine.

The settlement comes just two days after the SEC sued Musk for fraud and sought to block the way of entrepreneur from running affairs of Tesla or any other publicly-traded company.

In the immediate aftermath of the "funding secured" tweet, Tesla stock rose by six per cent. "Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the possible transaction lacked an adequate basis in fact", the SEC claims.

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


Even after the stock's slide from last year's peak, Tesla is valued at $45.2 billion in the stock market.

Steven Peikin, co-director of the SEC's Enforcement Division said the resolution is meant to prevent further market disruption and harm to Tesla investors.

"The total package of remedies and relief announced today are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors", said Stephanie Avakian, co-director of the SEC's Enforcement Division. Tesla did not immediately respond to a request for comment and Musk could not immediately be reached for comment.

"When companies and corporate insiders make statements, they must act responsibly", SEC Chairman Jay Clayton said.

But its shares have been hit hard since the SEC filed the lawsuit.

But several experienced litigators said on Monday that, while the DOJ probe is separate, the SEC's settlement could mark the end of official action against Tesla and Mr Musk.

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