Elon Musk’s SEC Deal Seen as Diminishing Threat of Criminal Probe

Article Image Elon Musk Resigns as Chairman Order to Pay $20 Million Fine

Shares of Tesla (TSLA) spiked Monday after the SEC settled a lawsuit accusing the company's founder and CEO Elon Musk of defrauding investors when he tweeted last month that he was considering taking the company private.

As part of a settlement agreed with the commission for that tweet, Elon was made to pay a penalty of $20 million as well as agreeing to step down as Tesla's chairman.

On Saturday, the SEC said that it also charged Tesla the same day "with failing to have required disclosure controls and procedures relating to Musk's tweets, a charge that Tesla has agreed to settle".

Tesla Inc's settlement with USA regulators will help soothe investors calling for more oversight of Chief Executive Elon Musk, experts said, even as it gives ammunition to short-sellers pursing separate cases and to a probe by the Justice Department.

As part of the settlement with the SEC, Tesla will also appoint an independent chairman and two independent directors, responding to calls on Wall Street to relieve the pressure on Musk and provide more balance in the carmaker's management. The $40 million in fines will be distributed to investors who claim to have been financially harmed by Musk's premature communications.

The settlement will stand post a court approval in which Tesla and Musk neither admit nor deny the charges levied by the SEC.

Brett Kavanaugh was 'belligerent and aggressive' drinker, Yale classmate says
Senator Jeff Flake, backed by fellow moderate Republicans Susan Collins and Lisa Murkowski, asked for the FBI investigation. "With that being said, I'd like it to go quickly". "The third one, I don't know much about". "I don't know", he said.

Tesla is now looking to fill its chairman role following the company's announcement of Musk's resignation over the weekend. "The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", said SEC enforcement division co-director Steven Peikin.

Rows of new Tesla Model 3 electric vehicles are seen in Richmond, California, U.S., June 22, 2018.

However, SEC alleged that Musk has duped investors since he was completely aware of the fact that the potential transaction wasn't that secure.

Musk and Tesla have already changed the perception of electric vehicles by making them fast and longer range.

The settlement marked a swift end to the SEC's lawsuit, which was filed Thursday.

If the company can meet targets, it will likely generate enough cash flow and profits that will underpin the company's future growth - without needing to go to the market for more funds any time soon.

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