Tesla shares soar after Musk gets ousted as chairman

SEC Lawsuit Against Musk Wiped $7.3 Billion From Tesla’s Market Value

It ends a case that began in August, shortly after the publications made by Elon Musk and that ended up not having any progress, and the company maintained its position in the stock market.

Investors anxious that heralded a long-drawn out fight with the regulator that would see Tesla lose its talismanic leader, undermine its ability to raise capital and cripple operations as it ramps up production of its crucial Model 3 sedan.

The shares closed at $307.52 on Thursday before the SEC announced its enforcement action over the tweets, in which Musk said he had "funding secured" to take the company private at $420 a share. It alleged that Musk's statements - including the assertion that he had "funding secured" to take Tesla private - "were premised on a long series of baseless assumptions and were contrary to facts that Musk knew".

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. Musk did not found Tesla but provided early financing.

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Under the agreement with the Securities and Exchange Commission, Musk and the company each will pay a US$20 million penalty, and Musk will be barred from serving as chairman for at least three years. In the settlement, Elon Musk is to pay a $20 million fine and Tesla will also pay a similar amount separately, totalling the fines to $40 million.

The company has recently been struggling to meet audacious production goals for its Model 3 sedan. Tesla's showroom in Paramus, New Jersey, was closed by 8 p.m. local time Sunday.

"He needs to settle, and the Tesla board needs to force him to settle", said John Coffee, director of the Center on Corporate Governance at Columbia Law School - and the chain of events proved he was right.

Tesla has turned to an army of volunteers to help it meet ambitious third quarter vehicle production targets after a bruising few days for chief executive Elon Musk, who was forced to pay $20m in order to settle a dispute with U.S. regulators. According to the SEC, "no disclosure controls or procedures" were put in place "to determine whether Musk's tweets contained information required to be disclosed in Tesla's SEC filings".

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