Published: Mon, October 01, 2018
Business | By Pearl Harrison

Tesla shares jump as SEC settlement leaves Musk in CEO role

Tesla shares jump as SEC settlement leaves Musk in CEO role

Tesla did not immediately respond to a request for comment and Musk could not immediately be reached for comment.

USA securities regulators settled a lawsuit against Musk alleging that he made false and misleading statements about plans to take the company private in August.

Tesla Inc. jumped in pre-market trading after founder Elon Musk settled a lawsuit brought by regulators over his August tweet storm, reassuring investors he'll still be calling the shots at the electric-car maker struggling to meet production goals.

The agreement eases pressure on Tesla's embattled CEO, who faced potentially being barred from serving as an officer or board member of a publicly traded company as a result of the charges, which stemmed from a tweet by Musk about taking the company private.

As of Friday afternoon, Tesla's stock price dropped by 14 percent to $264.77, erasing $7.3 billion in shareholder value. In an interview with Politico in 2014, the former vice president said he'd love to own a Tesla. The $40 million in fines will be distributed to investors who claim to have been financially harmed by Musk's premature communications.

Musk said he later decided against the plan.


"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", SEC co-director of enforcement Steven Peikin said.

Avakian and Peikin demanded that Musk pay $20 million and be removed as Tesla's chairman for at least three years, harsher terms than were being offered in the scrapped deal, people familiar with the matter said.

Furthermore, it adds: "Despite notifying the market in 2013 that it intended to use Musk's Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk's tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk's tweets contained information required to be disclosed in Tesla's SEC filings".

He arrived at the $420 a share figure by assuming a 20 percent premium on Tesla shares and rounding up one dollar because "he had recently learned about the number's significance in marijuana culture", and to impress his girlfriend, according to the SEC's complaint.

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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