Tesla shares spike after Elon Musk settles with SEC

01 October, 2018, 18:10 | Author: Kevin Carter
  • Elon Musk to Resign as Chair of Tesla Board but Remain CEO

However, the CEO of Tesla, of course, Elon Musk may resume this position within 3 years and managed to remain as the CEO of Tesla. Tesla is required to appoint two new independent directors to its board.

Neither Tesla nor Musk admitted wrongdoing under the settlement, which was reached two days after the regulator sued the billionaire over his tweeted claims to have had the funding and investor support to buy out stockholders at $420 a share. Tesla itself has also been slapped with a $20 million fine by the SEC, making Musk's tweet one of the most expensive in history.

The SEC said Musk's statements on Twitter were "false and misleading" and that he had never discussed the plans with company officials or potential funders.

In the Chicago suburb of Highland Park, more than 75 people crammed into Tesla's service center and another 50 or so waited outside. Tesla's free cash flow in the second quarter totaled negative $739.5 million, bringing the company to a net loss of $717.5 million, the company reported in August.

More news: Dianne Feinstein Was Elected In The Wake Of One Supreme Court Controversy

Tesla saw its stock price plunging after the SEC filed a lawsuit against Elon Musk over his now infamous "funding secured" tweet. Tesla's Denver drivers' club president Sean Mitchell said on Twitter that a team of "30 volunteers were providing 40 [plus] hours helping deliver and teach new owners" about the cars' different features. 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.

"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.

"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. Some analysts had said that Musk's departure would harm Tesla's brand, fundraising abilities and stakeholders' confidence if the company lost its key visionary.

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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