Tesla shares rise 17% after Elon Musk settles with SEC

Muriel Colon
October 2, 2018

He and Tesla will pay $20 million each, and the company will have to find an independent chairman to replace Musk, who will stay on as CEO.

On top of this, Elon Musk will also be required to resign as Chairman of Tesla within 45 days and he shall also be prohibited from holding this post for at least 3 years, however, he shall remain as CEO.

"We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday)", Mr Musk wrote in a mail to employees on Saturday.

Over the weekend, the US Securities and Exchange Commission (SEC) fined Tesla CEO Elon Musk $40 million split between both himself and the company, based on allegations of fraud causing significant disruption in the stock market. Musk has told upset customers that "we've gone from production hell to delivery logistics hell", and the CEO has incomprehensibly suggested the solution is for Tesla to build its own auto carriers, despite no evidence of any shortage of vehicle haulage capacity.

Musk has gained legions of fans for his bold approach to business and technology, using his 23 million Twitter followers account to promote Tesla, his rocket company SpaceX, and tunnel venture, the Boring Co.

Tesla's stock value ballooned when Musk tweeted about the idea, but then deflated when the plan fizzled out.

Tesla shares briefly rose at the opening bell before falling about 1 percent, to $307.82.

In Coral Gables, Florida, a showroom attendant who asked not to be named said deliveries were scheduled hour-by-hour to avoid congestion. That also makes the Model 3 by far the bestselling electric vehicle in the US, outselling the Nissan Leaf and the Chevy Bolt EV by more than 10-to-1.

"The real worry for the company is not the SEC but private actions that follow a settlement like this", said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

Others were so busy that volunteers showed up to help staff out.

Electrek, a website focusing on the electric-vehicle industry and particularly on Tesla's offerings, quoted an unnamed source as saying production levels reached an unprecedented level of roughly 80,000 for the third quarter. Production including 53,239 Model 3s, fulfilling guidance of between 50,000 to 55,000 vehicles for the latest quarter.

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. "The resolution is meant to prevent further market disruption and harm to Tesla's shareholders". Musk had wanted to personally pay the fine for money-losing Tesla but the SEC rejected that proposal, the person said.

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