Tesla Shares Soar After Elon Musk's SEC Settlement

Tesla Shares Soar After Elon Musk's SEC Settlement

Tesla Shares Soar After Elon Musk's SEC Settlement

The settlement requires that Tesla appoint two new independent directors and establish a committee of independent board members.

Mr Musk and Tesla Inc have also agreed to pay $20m each to financial regulators.

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. Tesla shares plummeted 14% on Friday, the biggest drop in nearly five years. Likewise, Tesla will pay another $20 million due to its failure to check whether Musk's announcements complied with the law. 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.

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.

The auto company has been aiming to hit a production target of between 50,000 and 55,000 vehicles per week, according to the company's own estimates.

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It ends a case that began in August, shortly after the publications made by Elon Musk and that ended up not having any progress, and the company maintained its position in the stock market. Musk is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three years.

"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.

"The total package of remedies and relief announced today are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors", said Stephanie Avakian, co-director of the SEC's Enforcement Division. 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.

Tesla shares took a steep dive last Friday, plunging 13.90% amidst news of the SEC's lawsuit against the outspoken CEO.

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