Tesla shares soar after Musk gets ousted as chairman

Oscar PerryOct 02, 2018

Shares of Tesla Inc (TSLA.O) jumped 18 percent on Monday as signs it had met targets for quarterly production numbers added to relief at Chief Executive Elon Musk's settling a lawsuit with regulators that could have forced him out.

Under the settlement, which requires court approval, Musk will be allowed to stay as CEO but must leave his role as chairman of the board within 45 days.

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.

Tesla shares took a steep dive last Friday, plunging 13.90% amidst news of the SEC's lawsuit against the outspoken CEO.

Musk and Tesla must each pay $20 million in fines, which will be distributed to traders who were harmed by the tweets. Tesla's Denver drivers' club president Sean Mitchell said on Twitter that a team of "30 volunteers were providing 40 [plus] hours helping deliver and teach new owners" about the cars' different features.

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Steven Peikin, co-director of the SEC's Enforcement Division said the resolution is meant to prevent further market disruption and harm to Tesla investors. The electric car-making company must also appoint two new independent directors to its board, establish a new committee of independent directors and implement additional oversight of Musk's future communications.

"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", SEC co-director of enforcement Steven Peikin said.

Tesla analyst Garrett Nelson of CFRA Research upped his rating on the stock Monday morning to Hold, after downgrading it on Friday to Sell.

The row began in August when Musk (47) tweeted that he was considering taking Tesla private at $420 a share and had secured funding.

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

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