Musk Sees "Victory" Tuesday, SEC Deal: Tesla Jumps

01 October, 2018, 18:11 | Author: Corey Lynch
  • Elon Musk to Resign as Chair of Tesla Board but Remain CEO

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. The shares closed at $307.52 Thursday before the SEC announced its enforcement action over the tweets, in which Musk said he had "funding secured" to take the company private at $420 a share. Tesla will also need to bring a couple more independent directors on board.

The SEC, in a complaint to the court, claimed that Elon Musk had failed to abide by the anti-fraud provisions of the federal securities laws.

Tesla 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. "Funding secured." Later on, the SEC ruled that Musk never went through with his declaration and deal between the company and the Saudi sovereign wealth fund set to foot the bill on the buyout.

As of Friday afternoon, Tesla's stock price dropped by 14 percent to $264.77, erasing $7.3 billion in shareholder value.

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.

From the beginning of this case, the SEC requested as a penalty that Elon Musk had left the position of chairman from the board of Tesla, something that has now been achieved.

As part of the multi-million dollars settlement, Musk will remain as the Chief Executive Officer (CEO), but can't take the seat as the chairman for three years. And during a Reddit AMA the same year, he said "in Musk I trust" when asked if Telsa will make it as a vehicle company. 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 resolution is meant to prevent further market disruption and harm to Tesla's shareholders", SEC co-director of enforcement Steven Peikin said.

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

Musk has courted several controversies in recent times by making a series of unusual public comments or appearances, including an Internet interview in which he appeared to smoke marijuana. With products like the Model S, Model X and, even with its production woes, the Model 3, it's easy to see why.



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