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Tesla shares jump after Musk settles with SEC

01 October, 2018, 22:52 | Author: Mary Valdez
  • Investor's Corner Tesla community comes together for final end-of-quarter Model 3 delivery push

According to the agreement filed on Saturday, Musk must resign as chair within 45 days.

Tesla Inc. 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. The SEC cited "significant market disruption" as the primary repercussion of Musk's loose lips, as well as questioning Tesla's dissemination of information.

Musk's dispute with the SEC arose from an August 7 tweet in which Musk claimed to have "funding secured" to take the company private at $420 per share.

Lawyers say the settlement and size of the fine may give more ammunition to short-sellers pursuing separate cases against Mr Musk for manipulating the company's shares as well as to a probe by the Justice Department.

Automotive news website Electrek reported after the opening bell that Tesla had produced 53 000 of its Model 3 sedans in the third quarter, citing a source familiar with the matter.

Following the announcement that Musk would settle and step down as chairman, Tesla's stock stabilised after its 14 percent drop, shooting back up 15 percent at $305 per share.

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

Initially, Musk was ready to accept SEC's proposed settlement that stipulated he would step down as chairman for two years and pay between $5-10 million as a fine.

The charges come after Musk claimed in August via a series of tweets that he was planning to take the electric auto maker private, and implied that such a move was imminent with "funding secured".

In emails leaked to CNBC, Musk hinted that Tesla was "very close" to being profitable and told staff to "ignore the distractions".

The settlement also requires Tesla appointing two new independent directors, and Tesla setting up a "new committee of independent directors and put in place additional controls and procedures to oversee Musk's communications".

Tesla is also under heavy pressure to turn a profit because it is burning through $1 billion in cash every three months and, as of the end of June, had just $2.2 billion in the bank.

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