Elon Musk Settles With SEC, Quits As Tesla Chairman

Elon Musk Settles With SEC, Quits As Tesla Chairman

According to a report, Elon Musk has resigned as the chairman of Tesla.

Shares of Tesla Inc jumped almost 15 percent on Monday after Chief Executive Elon Musk settled a lawsuit from the US Securities and Exchange Commission (SEC) that sought to remove him from company management.

Analysts were relieved on Monday at the terms of Tesla chief Elon Musk's settlement with the SEC reached over the weekend, but some remain concerned over longer-term challenges the automaker faces.

Many see the forced changes as being positive for Tesla, partly because the mercurial Musk will now have someone to answer to, and partly because his reduced role may allow the chronically overworked CEO to focus more.

Sunday marks the end of the third quarter, and Tesla has frantically pushed to boost deliveries before the period ends.

Musk and Tesla will each pay $20 million under the settlement, the SEC said in a statement Saturday.

The SEC's lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors.

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After filing the lawsuit, SEC officials were anticipating a drawn-out legal battle, but settlement talks started up again late Friday after Musk's attorney Steven Farina sent an email asking to reopen the discussions.

Musk's dispute with the SEC arose from an August 7 tweet in which Musk claimed to have "funding secured" to take the company private at $420 per share. The tweets had no basis in fact, and the ensuring market chaos hurt investors, the SEC said.

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".

The company is expected to release quarterly production numbers this week for the Model 3, seen by analysts as crucial to the carmaker's drive to achieve long-term profitability.

Ivan Feinseth of Tigress Financial Partners, also a Tesla analyst, called the settlement "an incredibly beneficial outcome for the company", adding that while he remains neutral on the stock, he would be a buyer in the $255-$275 price range.

In emails leaked to CNBC, Musk hinted that Tesla was "very close" to being profitable and told staff to "ignore the distractions".

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