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

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

Under the agreement with the U.S. Securities and Exchange Commission, Musk and the company each will pay a US$20 million penalty, and Musk will be removed as chairman for at least three years.

The news of Tesla CEO Elon Musk settling with US financial regulators sent the company's stock soaring Monday morning.

Since then, Musk has agreed to pay out the $20 million fine.

Investors breathed a sigh of relief over the weekend after Musk struck a settlement with the Securities and Exchange Commission, the United States financial markets regulator, on Saturday night to end a legal spat over his failed plan to privatise Tesla.

The SEC alleged in a lawsuit on Thursday that the tweets about financing for a go-private plan he abandoned just weeks later had no basis in fact, and said the market chaos that ensued hurt investors.

The optimistic memo and Musk's near-miss are expected to result in Tesla's shares rallying today.

Many see the forced changes as being positive for Tesla, partly because the mercurial Musk will now have someone to answer to, and partly because his reduced role may allow the chronically overworked CEO to focus more. Tesla is due to appoint two new independent directors, with the board expected to oversee Musk's communications with investors.

Musk has courted several controversies in recent times by making a series of unusual public comments or appearances, including an Internet interview in which he appeared to smoke marijuana.

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