Tesla Stock Soars After Musk Settles With SEC
Elon Musk taunted the SEC with his tweet "naughty by nature."
The value of Tesla stock has risen over 16% in trading last Monday following Elon Musk's signing of a deal with the SEC on the weekend. The gains on Monday erased the 14% decline of Tesla stock on Friday after the lawsuit was filed late Thursday by the SEC.
The dispute between Musk and the SEC occurred after Musk tweeted on August 7 that he had secured the funding needed to take Tesla private at a price of $420 a share. However, it soon became obvious that the commitment for this funding by the sovereign wealth fund of Saudi Arabia had only been made informally.
For this reason, on Thursday the SEC filed a suit against Musk charging securities fraud. At first, Musk claimed he was going to fight against the charges, but following the rapid decline of Tesla's stock price, he reconsidered his position and settled the lawsuit on Saturday.
Despite his settlement with the SEC this weekend, Musk gave a signal on Monday that he does not plan to behave better in the future.
The terms of the settlement between the SEC and Musk require Musk to step down as chairman of the board of Tesla for the next three years. In addition, the company must appoint two independent board members. Musk can continue in his position as CEO of the company, but the SEC aims to make the board more independent from Musk and to provide more scrutiny of his activities.
Tesla and Musk are required to each pay a fine of $20 million which will go to those traders who were hurt financially as a result of the tweets.
These actions came this weekend just as the company was attempting to wind up its third quarter which ended Sunday. Elon Musk had announced that Tesla would have a positive cash flow and become profitable in this quarter. Many Wall Street analysts had claimed that Tesla would require additional funding
"We will achieve victory in one more weekend," Musk had written in an email to Tesla workers on Friday. Later that same weekend, he wrote, "we are near to proving the naysayers have been wrong about achieving profitability, but we must perform exceptionally well on Sunday."
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