Tesla shares jump after SEC settlement leaves Elon Musk as CEO

Anna Jefferson
October 1, 2018

"The open board chairperson role creates an opportunity for Tesla to potentially put someone in place that is capable of influencing Musk and helping Tesla reach sustainability", Munster said. However, according to the latest reports, the CEO of Tesla, the well-known vehicle manufacturing company, of course, Elon Musk resigns as chairman of Telsa.

The electric auto maker is expected to report third-quarter production numbers on Tuesday, following a period of turbulence, including a run-in with securities regulators that culminated in Musk being ousted as Tesla's chairman and hit with a multimillion-dollar fine.

The SEC's allegations were related to statements Musk had made in August on Twitter and on his company website claiming that he had "funding secured" to bring Tesla private. "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.

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"The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla - including Musk's removal as chairman of the Tesla board - and the payment by Musk and Tesla of financial penalties" of $20 million each, the Securities and Exchange Commission said in a statement. Tesla shares plummeted 14% on Friday, the biggest drop in nearly five years. A more assertive board could provide the kind of tighter oversight that many legal experts, and Tesla investors, say is overdue for a company of Tesla's market value.

In the Chicago suburb of Highland Park, more than 75 people crammed into Tesla's service center and another 50 or so waited outside. However, if found guilty, Musk stood to lose a lot more than $20m and could have been ousted as CEO of the company.

He arrived at the $420 a share figure by assuming a 20 percent premium on Tesla shares and rounding up one dollar because "he had recently learned about the number's significance in marijuana culture", and to impress his girlfriend, according to the SEC's complaint.

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Tesla is seeking to ramp up production of its Model 3, the mass-market vehicle seen as a key to the automaker's future.

The settlement with the SEC won't be the end of the matter, though, as Musk is also facing a series of class action lawsuits relating to the tweets.

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