Elon Musk steps down as Tesla Chairman after Controversial Tweet

Elon Musk steps down as Tesla Chairman after Controversial Tweet

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.

It's not a bad outcome for Musk and Tesla, considering the potential implications of his August 7 tweet, where Musk said he was considering taking the company private, at $US420 a share, and had "funding secured". According to the SEC, Musk has agreed to not only relinquish his position, but will also pay a hefty $20 million fine (in which the company also has to pay an equivalent amount).

The settlement also requires Tesla appointing two new independent directors, and Tesla setting up a "new committee of independent directors and put in place additional controls and procedures to oversee Musk's communications".

Under the terms of the settlement, Musk and Tesla neither admit nor deny the SEC's allegations.

In emails to Tesla staff, Musk said that if the staff could pull through the pressure on Sunday, the company could be close to achieving an "epic victory" on production goals, CNBC reported. Some have argued Musk should even give up the CEO role and assume a post such as chief technical officer.

Tesla sharply boosted the number of vehicles rolling off the assembly line between July and September, the electric auto maker said Tuesday. The SEC's complaint alleged that Musk had made "false and misleading" statements, with Tesla's share price having risen on the back of Musk's tweet.

In the immediate aftermath of the "funding secured" tweet, Tesla stock rose by six per cent.

New import tariffs mean Chinese imports of Tesla vehicles now face tariffs of 40pc, compared to 15pc for other imported cars in the country.

That is borne from a multiple reasons - greed is one, but the most common thread seems to be from those who have a lot to lose if Musk does deliver on his plan to rid the global economy of fossil fuels.

The company's production and delivery numbers for the quarter are yet to be announced, but estimates, including those from Tesla's staunchest critics from Wall Street, are high that the company has achieved its target of manufacturing and delivering more than 50,000 Model 3 in the third quarter. The second is a series of class-action lawsuits filed by investors who say they lost money due to the market volatility after Musk's statements. An equity settlement could end up diluting Musk's roughly 19 percent stake in Tesla, further reducing his influence on the board.

Investors were reassured as Elon Musk's Tesla reached a deal with regulators over the weekend.

Related Articles