Friday, 19 October, 2018


Tesla shares spike after Elon Musk settles with SEC

Elon Musk to Resign as Chair of Tesla Board but Remain CEO Elon Musk to Resign as Chair of Tesla Board but Remain CEO
Conrad Doyle | 01 October, 2018, 17:22

The news of Tesla CEO Elon Musk settling with USA financial regulators sent the company's stock soaring Monday morning.

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

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

The US Securities and Exchange Commission said on Saturday that car-maker Tesla and Chief Executive Elon Musk had agreed to pay $20 million each under a settlement that will also see the billionaire step down as chairman after a tumultuous two months for the company.

Musk will purchase $20 million worth of the company's stock in the next trading opportunity, according to a person familiar with his plans.

While the 15-year-old company has never earned an annual profit, Tesla's CEO has vowed it's the verge of making money and stemming cash burn that's exceeded more than $1 billion in recent quarters.

"Both sides have pulled back, taken a deep breath and realized that in the interest of the company, its shareholders, they need to put this behind them", said Stephen Crimmins, a former SEC enforcement lawyer who's now a partner at Murphy & McGonigle.

Tesla shares sank last week after the SEC accused Mr Musk of securities fraud, opening up the prospect of a long-drawn out fight that could have seen Tesla lose its leader, undermine its ability to raise capital and cripple operations. The appointment of two new Board members, as well as the creation of a committee tasked with "placing additional controls and procedures to oversee" Musk's communications, were warmly received by the Tesla community as well.

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.

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

Analysts expect Wall Street will now be able to focus more on third quarter production numbers for the company's Model 3 sedan this week.

The settlement doesn't resolve investors' lawsuits, which were significantly strengthened by the SEC's complaint.

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