Elon Musk resigns as Tesla chairman with multi-million dollar settlement

01 October, 2018, 19:39 | Author: Frank Williams
  • CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne California

US securities regulators settled a lawsuit against Musk alleging that he made false and misleading statements about plans to take the company private in August.

Investors in electric auto maker Tesla were buoyed by news that Elon Musk will have to step down as chairman of the firm.

You see, even with offerings like the Toyota Prius and Nissan Leaf, the idea of a market-friendly electric vehicle that's both stylish and fun-to-drive has never been more mainstream than it has with Musk and Tesla leading the charge.

The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk's tweets.

Shares of Tesla jumped almost 16% today after chief executive Elon Musk settled with the US Securities and Exchange Commission (SEC) over charges of misleading investors, heading off moves to force him out. Munster pointed out that the terms of the settlement actually works in Tesla's favor, as the appointment of a new, capable Chairman of the Board could help Tesla reach sustainability, as well as become the wake-up call that Musk needs with regards to his behavior online. Along with leaving, Musk has to pay a $20 million fine for a tweet he fired off saying he planned on a massive buyout of Tesla. In addition to appointing an independent chairman, Musk will be ineligible to be re-elected as chairman for three years.

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Tesla jumped in pre-market trading after Elon Musk settled a U.S. lawsuit over his take-private tweet storm, reassuring investors that the billionaire will keep calling the shots at the electric-car maker he's said is on the verge of profitability.

"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", SEC co-director of enforcement Steven Peikin said. On Friday, its stock dropped nearly 14 per cent.

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

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.

"Shareholders with Tesla will be able to go to sleep tonight knowing the Musk will remain at the helm of the company".

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