Tesla Shares Jump; Elon Musk Says Company Close To Achieving Profit

Tesla Shares Jump; Elon Musk Says Company Close To Achieving Profit

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.

Tesla will now be appointing two new independent directors to its board.

The complaint alleged that Mr Musk made "false and misleading statements" about plans to take the company private in August.

According to the existing information, Elon Musk has 5 days to leave the post.

Elon Musk will give up the role of Tesla Inc. chairman and pay a $20 million penalty to settle fraud charges brought by the United States over his claims about taking the company private.

Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk's tweet.

Analysts hoped the deal would cap several months of volatility around Tesla's shares driven by a series of tweets and public pronouncements by Musk, and allow investors to focus on the company's efforts to ramp up production. But it quickly became clear that Musk's funding commitment-supposedly from Saudi Arabia's sovereign wealth fund-was informal at best.


In a statement, the SEC added that the settlements are subject to court approval and that they would also require comprehensive corporate governance and other reforms at Tesla. Musk won't be eligible to be re-elected as chairman for three years.

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

However, Musk has agreed to a condition where he will not admit nor deny if he was guilty of committing the securities fraud.

Stephanie Avakian and Steve Peikin, co-directors of the SEC's Enforcement Division, led the talks, taking the reins from the staff attorneys who worked the case, according to two people familiar with the matter.

The CEO of Tesla, of course, Elon Musk's Twitter communications have always been patchy and seemingly unreflected. On Friday, its stock dropped nearly 14 per cent.

After filing the lawsuit, SEC officials were anticipating a drawn-out legal battle, but settlement talks started up again late Friday after Musk's attorney Steven Farina sent an email asking to reopen the discussions. 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.

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