Tesla shares jump as SEC settlement leaves Musk in CEO role

Tesla shares jump as SEC settlement leaves Musk in CEO role

Tesla shares jump as SEC settlement leaves Musk in CEO role

Tesla stock (NASDAQ:TSLA) is exhibiting a strong recovery on Monday, trading up 15.40% at $305.54 per share during the opening bell.

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

"The $40 million in penalties will be distributed to harmed investors under a court-approved process", the SEC said.

Elon Musk will give up the role of Tesla Inc. chairman and pay a $20 million penalty to settle fraud charges brought by the U.S. over his claims about taking the company private. Tesla will also pay a $20 million fine. The SEC's lawsuit charged that the tweet, which caused Tesla's shares to jump, was misleading because he did not actually have the funding lined up for such a move. The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

The agreement allows him to stay on as the chief executive of Tesla, although he will have to hand over the reins as chairman of the board and must pay a $20m (£15m) fine to settle fraud charges.

In a blog post following the settlement, Munster said Gore would be an "interesting" choice for Tesla given his climate change credentials align with the company's ambitions.

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. On Saturday, the SEC released an update announcing that Musk had accepted a settlement for his lawsuit.

As part of the settlement, Tesla will appoint an independent chairman, two independent directors, and a board committee to set controls over Mr Musk's communications under the proposed agreement.

The company has recently been struggling to meet audacious production goals for its Model 3 sedan. 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.

Related news