Tesla, CEO Elon Musk settle SEC fraud case for $40M

30 September, 2018, 01:57 | Author: Shannon Aguilar
  • Musk's Tesla position uncertain as US regulators sue Musk for fraud

In addition, Tesla must replace Musk with an independent chairman; Musk can't be considered as chairman for at least three years.

Mr Musk initially responded to the charges by saying the action was "unjustified" and he acted in the "best interests of truth, transparency and investors". The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

He wrote he had "funding secured" for the proposal, which would value Tesla at $420 per share.

But Musk, who is synonymous with the Tesla brand, will remain as chief executive under the settlement over tweets he posted on August 7 about taking the company private, the SEC said.

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Tesla has agreed to settle the complaint with the SEC and will appoint two new independent directors to its board.

Under the terms of the deal, he will also have to comply with company communications procedures when tweeting about the firm. This likely means an end to his off the cuff remarks which include calling a rescuer a "pedo" guy. In similar fashion to the Musk settlement, those funds will be used to compensate investors.

The tweet caused Tesla's stock price to jump by over 6 percent that day "and led to significant market disruption", the agency says. Neither Musk nor Tesla admitted or denied the SEC's findings as part of the settlement. Speaking of the settlements, both are still subject to court approval.

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