A federal judge has approved the settlement of Tesla Inc. Chief Executive Elon Musk with the U.S. Securities and Exchange Commission, boosting the company’s stock on Tuesday and closing a chapter many investors in the Silicon Valley car maker would rather forget.
The final written words in the Tesla
going-private saga and the related fraud charges were standard, but no less ominous-sounding for Musk and the company: The court “shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.”
Tesla’s valuation on Tuesday hovered around $46 billion, having lost roughly $12 billion since Aug. 6. The car maker’s market capitalization ballooned to nearly $65 billion on Aug. 7, the day Musk tweeted he had “funding secured” to take Tesla private at $420 and shares rallied 11%, from about $58 billion the day before, according to FactSet.
Terms of the settlement included Musk agreeing to step down as Tesla’s chairman for three years and Tesla and Musk each paying a $20 million fine. Terms of the deal also require Tesla to impose controls to oversee Musk’s communications, including tweets.
It is unclear when Tesla intends to implement that part. Musk has to show SEC officials, in writing, that he is complying with that requirement, and he has 14 days to submit documentation. He also has 14 days to pay the fine.
Musk and regulators reached the settlement last month to end SEC charges that he misled investors and violated securities laws with the “funding secured” tweet. Musk and Tesla agreed to the settlement without admitting or denying the allegations.
Musk earlier this month alarmed Tesla investors by appearing to mock the SEC, calling it the “Shortseller Enrichment Commission,” although few believed his swipes would imperil the settlement as Musk did not outright deny the SEC allegations in the original complaint.
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