Economy

SEC Lawsuit Against Musk Wiped $7.3 Billion From Tesla’s Market Value

SEC Lawsuit Against Musk Wiped $7.3 Billion From Tesla’s Market Value

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 rise pretty much makes up for the losses suffered Friday, after the Securities and Exchange Commission (SEC) officially sued Musk over his tweet about having secured funding for a plan to take Tesla private.

Musk will remain Tesla CEO after settling SEC fraud charges over his infamous "funding secured" tweet about taking the vehicle firm private.

Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk's tweet.

Loup Ventures Managing Partner Gene Munster noted that the SEC settlement is the best outcome possible from Elon Musk's "funding secured" fiasco.

More news: Blame United's players for 'horrendous' display - Shaw

Likewise, Tesla will pay another $20 million due to its failure to check whether Musk's announcements complied with the law.

"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", Steven Peikin, co-director of the SEC's Enforcement Division, said in the statement. Musk said August 7 in a company blog post that he was considering taking Tesla private at $420 per share, representing a 20% premium over the stock price following the company's second-quarter earnings release.

The agreement allows Musk to stay on as CEO of the company that has struggled to meet manufacturing deadlines and slow cash burn.

Curiously, and as one of the parties to the deal, Elon Musk has accepted that he can never admit or deny that he has committed fraud, which in practice means he can never publicly state that he has done nothing wrong.

In a blog post following the settlement, Munster said Gore would be an "interesting" choice for Tesla given his climate change credentials align with the company's ambitions. 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.


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