The settlement between a federal regulator, Tesla and its CEO, Elon Musk has been approved by a US Judge. With this, a difficult period for Tesla’s investors has come to an end which started after Elon Musk tweeted that he has secured an investment to take the company private.
Post the announcement, Tesla’s shares rose around 5.5% to $273.88 but then fell to $271.63 on Nasdaq, according to Reuters. However, even then, stocks are still 20% less than what they were prior to August 6. It was on August 6 that Elon Musk took to Twitter and said that he will be taking the company private.
And now, the motion filed by the US Securities and Exchange Commission which highlights the agreement with Tesla and Elon Musk has been approved by Judge Alison Nathan of the US District Court for the Southern District of New York.
A Tesla spokesperson confirmed the settlement, but did not comment any further on the matter.
According to the agreement, Musk has to a fine of $20 million and step down as the chairman for the next three years. He agreed to this to settle the charges that has to the potential to make him leave Tesla. Even though the company has not been charged with fraud, it will be paying a fine of $20 million too.
Tesla also must appoint an independent chairman, two independent directors and a board committee that will control Elon Musk’s communications. Including his Twitter account.
It was last month that Musk got accused of fraud for his “false and misleading” tweets in August by the US Securities and Exchange Commission.
Earlier this month on October 4, when Musk and SEC were asked by Judge Nathan to explain why their settlement was just, Musk took to Twitter to mock the SEC. His tweet read, “Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”
Just a day after Musk’s tweet was posted, billionaire investor David Einhorn’s Greenlight Capital hedge fund criticized Tesla and said that Musk had been deceptive. He further said that Tesla’s situation was similar to Lehman Brothers right before the company collapsed. This led to a fall in the electric carmaker’s shares by 7%.
Tesla now has time till November 13 to appoint a new Chairman and according to a report in The Financial Times, Twenty-First Century Fox Inc CEO James Murdoch is a lead candidate for the role. However, Musk has said that the report is incorrect.