Published: Mon, October 01, 2018
Money | By Armando Alvarado

Tesla stock soars as Musk taunts the SEC with a tweet

Tesla stock soars as Musk taunts the SEC with a tweet

Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.

Shares of Tesla jumped almost 16% today after chief executive Elon Musk settled with the US Securities and Exchange Commission (SEC) over charges of misleading investors, heading off moves to force him out. Under the settlements, which are contingent on court approvals, Musk will step down as Tesla chairman and will be replaced by an independent chairman. The SEC was seeking to prohibit Musk from serving as an officer or director of a public company.

Curiously, and as one of the parties to the deal, Elon Musk has accepted that he can never admit or deny that he has committed fraud, which in practice means he can never publicly state that he has done nothing wrong.

According to the SEC's complaint, Musk's misleading tweets caused Tesla's stock price to jump by over six percent on August 7, and led to significant market disruption.

Tesla analyst Garrett Nelson of CFRA Research upped his rating on the stock Monday morning to Hold, after downgrading it on Friday to Sell. The shares closed at US$307.52 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 US$420 a share.

Tsunami sweeps away homes on Indonesian island of Sulawesi
Oil company Pertamina said its fuel depot in Donggala had been damaged in the incident though there was no oil spill. Another series of strong quakes in mid-August killed at least a dozen on Lombok and neighboring Sumbawa island.

Steven Peikin, co-director of the SEC's Enforcement Division said the resolution is meant to prevent further market disruption and harm to Tesla investors. With products like the Model S, Model X and, even with its production woes, the Model 3, it's easy to see why.

Automotive news website Electrek reported after the opening bell that Tesla had produced 53 000 of its Model 3 sedans in the third quarter, citing a source familiar with the matter. The appointment of two new Board members, as well as the creation of a committee tasked with "placing additional controls and procedures to oversee" Musk's communications, were warmly received by the Tesla community as well.

Musk and Tesla must each pay $20 million in fines, which will be distributed to traders who were harmed by the tweets.

Under the agreement with the Securities and Exchange Commission (SEC), Musk and the company each will pay a $20m penalty, and Musk will be barred from serving as chairperson for at least three years.

Like this: