Tesla Shares Rise After SEC Lawsuit Leaves Musk as CEO

Adjust Comment Print

Mr Musk, Tesla's controversial co-founder and chief executive, bowed late on Saturday to demands from America's financial markets watchdog to relinquish his seat at the head of the board.

As part of the settlement, the company will appoint a new independent chairman, two independent directors and control Musk's communications.

Musk's "funding secured" tweets were made on 7 August, and claimed that he was planning to take the company private at a price of $420 per share - a premium of just over 20 per cent of the company's stock price (which has since nose-dived) at the time.


Tesla shares are expected to rebound today after Elon Musk was forced to stand down as chairman in a boardroom shake-up at the electric carmaker.

Tesla has turned to an army of volunteers to help it meet ambitious third quarter vehicle production targets after a bruising few days for chief executive Elon Musk, who was forced to pay $20m in order to settle a dispute with U.S. regulators.

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".


But several experienced litigators said on Monday that, while the DOJ probe is separate, the SEC's settlement could mark the end of official action against Tesla and Musk.

Loup Ventures Managing Partner Gene Munster noted that the SEC settlement is the best outcome possible from Elon Musk's "funding secured" fiasco. Achieving those milestones would be a rebuke to may on Wall Street who have insisted that Tesla would need to raise additional funds in the coming months.

"The SEC's complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies".


"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", Peikin added. The complaint "alleges that Musk violated antifraud provisions of the federal securities laws, and seeks a permanent injunction, disgorgement, civil penalties, and a bar prohibiting Musk from serving as an officer or director of a public company", the SEC said on Thursday when it filed the complaint at court. Tesla did not immediately respond to a request for comment and Musk could not immediately be reached for comment.

Comments