Tesla's SEC deal provides ammunition for US probe, investor lawsuits

More stock whiplash as Tesla rebounds after Musk settlement

ELON MUSK has agreed to resign as chairman of Tesla and to pay a $20m fine in order to settle charges of securities fraud.

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. 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).

As part of the settlement, Tesla will appoint an independent chairman, two independent directors, and a board committee to set controls over Mr Musk's communications under the proposed agreement.

The $40 million penalty amount will be distributed to investors seeking justice under a court controlled procedure.

The settlement will stand post a court approval in which Tesla and Musk neither admit nor deny the charges levied by the SEC.

In a shock announcement in August, Tesla CEO Elon Musk announced that he has weighed taking the electric vehicle company private at $420 a share.

Musk has gained legions of fans for his bold approach to business and technology, using his Twitter account to promote Tesla, his rocket company SpaceX and the tunnel venture Boring Co. The original lawsuit had sought to remove him both as chairman and as CEO.

In addition, Tesla continues to lack access to cash incentives available to locally produced electric vehicles in China that are typically around 15% of MSRP or more.

"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. The "false and misleading" claims, as the SEC called them, risked misleading investors into thinking the company already had the funding to go private.

Now attention is likely to shift to the figures for production and delivery of Tesla's electric cars, and particularly its Model 3 midsize sedan. Tesla did not maintain that pace, but production was still high enough to keep the company on track to turn a sustained profit for the first time. 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.

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