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Tesla, Elon Musk Remain Mum on Settlement With S.E.C. as Shares Rebound
Although Elon Musk and Tesla reached a $20-million settlement with the Securities and Exchange Commission over the weekend after the government agency had sued Musk last week for tweeting about taking Tesla private, neither he nor his company had issued a statement about the settlement as of Monday afternoon.
Despite Musk and Tesla staying quiet about the settlement, Tesla’s shares rose 14 percent in Monday morning trading, recovering all of the losses it had suffered after the S.E.C.’s lawsuit on Thursday. The main reason for the rally: While Musk will not be allowed to serve as chairman of the board for at least three years, the S.E.C. has agreed to allow him to remain the company’s chief executive.
Here are the full terms of Tesla’s settlement with regulators:
- Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman for three years;
- Tesla will appoint a total of two new independent directors to its board;
- Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications;
- Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
While Musk has remained quiet so far about the settlement, he included an email he sent to employees over the weekend in a financial filing on Sunday – perhaps in a good-faith effort to boost transparency to investors. The email seems to show that Musk is carrying on as normal:
We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday).
If we go all out tomorrow, we will achieve an epic victory beyond all expectations.
Thanks for all your hard work,
“This matter reaffirms an important principle embodied in our disclosure-based federal securities laws,” S.E.C. Chairman Jay Clayton said in a statement about the settlement. “Specifically, when companies and corporate insiders make statements, they must act responsibly, including endeavoring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision.”