Elon Musk resigns, pays $20m fine in settlement with SEC

Elon Musk resigns, pays $20m fine in settlement with SEC

The deal with the powerful Securities and Exchange Commission, will require Musk to stand down as chairman, and cede sovereignty over his Twitter activities, and for both Tesla and Musk to pay $US20 million fines.

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.

Musk's "funding secured" tweets were made on 7 August, and claimed that he was planning to take the company private at a price of $420 per share - a premium of just over 20 per cent of the company's stock price (which has since nose-dived) at the time.

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By allowing Musk to stay on as CEO under the settlement, the SEC has avoided the possibility that removing Musk from Tesla could cause investors to lose faith in the company's ability to thrive without him, potentially leading to more instability in its share price and value. An initial verdict of feat or failure could land as soon as Monday, in the form of Tesla's latest quarterly release.

Its shares rebounded 17 per cent on Monday in the U.S. to rebound to around $US310 a share, returning the company to a $US53 billion plus ($A73 billion) valuation, and no doubt causing rage among its critics and short sellers. Shareholders are betting the company is on the cusp of stemming losses and cash burn thanks to its lower-priced Model 3 sedan.

In the Chicago suburb of Highland Park, more than 75 people crammed into Tesla's service center and another 50 or so waited outside.

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In fact, the biggest impact will be the new chairperson of Tesla.

Tesla is expected to release third-quarter production this week, and investors are watching to see if it hit targets for the Model 3, a high-volume vehicle. "The total package of remedies and relief announced today are specifically created to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors", Stephanie Avakian, Co-Director of the SEC's Enforcement Division.

But several experienced litigators also said that, while the DOJ probe is separate, the SEC's settlement might mark the end of official action against Tesla and Musk.

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Pursuant to recent reports, Tesla (NASDAQ: TSLA) and its CEO, Elon Musk have to bow down to charges and have acquiesced to pay $40 million along with subsequent concessions. This sees the CEO and Tesla each paying a $20 million fine, while Musk will be replaced by an independent Chairman, unable to put himself up for re-election for a minimum of three years.

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