Tesla shares jump after Musk settles with SEC

Andrew Cummings
October 1, 2018

The SEC alleged in a lawsuit on Thursday that the tweets about financing for a go-private plan he abandoned just weeks later had no basis in fact, and said the market chaos that ensued hurt investors.

The settlement will require the billionaire to relinquish his role as chairman for at least three years, but he will able to remain as chief executive.

The SEC had charged Musk with securities fraud, alleging that he misled investors when he tweeted on August 7 that he had "funding secured" to privatise the electric automaker at $420 (roughly Rs. 30,500) a share.


The agreement allows Musk to stay on as CEO of the company that has struggled to meet manufacturing deadlines and slow cash burn.

In a blog post following the settlement, Munster said Gore would be an "interesting" choice for Tesla given his climate change credentials align with the company's ambitions.

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 Mr Musk.


Investors anxious that heralded a long-drawn out fight with the regulator that would see Tesla lose its talismanic leader, undermine its ability to raise capital and cripple operations as it ramps up production of its crucial Model 3 sedan. On Saturday, the SEC released an update announcing that Musk had accepted a settlement for his lawsuit.

That's according to Gene Munster, a managing partner at the venture capital firm Loup Ventures and prominent Tesla bull, who is already talking up replacements for Musk with his seat on the board not-yet cold.

"As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla's board will adopt important reforms - including an obligation to oversee Musk's communications with investors - and both will pay financial penalties", Steven Peikin, Co-Director of the SEC's Enforcement Division, said in a statement.


Musk has said the company needs to produce 7,000 cars a week to make money, a target he aimed to reach in the July-September quarter.

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