Tesla stock roars back after Elon's SEC deal

"As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla's board will adopt important reforms -including an obligation to oversee Musk's communications with investors-and both will pay financial penalties", Steven Peikin, Co-Director of the SEC's Enforcement Division, said in the SEC statement.

Tesla jumped in pre-market trading after Elon Musk settled a United States lawsuit over his take-private tweet storm, reassuring investors that the billionaire will keep calling the shots at the electric-car maker he's said is on the verge of profitability. Tesla will also be required to appoint two additional board members who are independent of Elon Musk.

Tesla stock (NASDAQ:TSLA) is exhibiting a strong recovery on Monday, trading up 15.40% at $305.54 per share during the opening bell.

The news of Tesla CEO Elon Musk settling with US financial regulators sent the company's stock soaring Monday morning.

Less than two days later, Musk and the SEC reached an agreement, in which he would step down as chairman for three years and pay a $20 million fine. It was also revealed that funding was far from secured. Under the settlements, which are contingent on court approvals, Musk will step down as Tesla chairman and will be replaced by an independent chairman.

He arrived at the $420 a share figure by assuming a 20 percent premium on Tesla shares and rounding up one dollar because "he had recently learned about the number's significance in marijuana culture", and to impress his girlfriend, according to the SEC's complaint.

"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", SEC co-director of enforcement Steven Peikin said. Tesla shares plummeted 14% on Friday, the biggest drop in nearly five years. However, at the last moment he changed his mind, and in turn the SEC filled a lawsuit claiming that "Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source".

Analysts from Cowen wrote in a note over the weekend that while the settlement would likely lead to a near-term bump for Tesla shares, it could leave Musk open to future litigation - including class-action lawsuits that have already been filed. Musk is Tesla's largest investor, holding a 20-percent stake in the company.


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