Tesla saw a rise in its shares by 5% on Tuesday after the US District Judge Alison Nathan in Manhattan approved Musk’s settlement with SEC over his false tweets. The term will now see both Musk and the firm, and each will pay $20 million in penalties. This news is a relief for those who were fearing a more serious action after Musk’s recent tweets went on the social media about mocking the SEC. The official judgment has confirmed that Musk will now resign from his chairman role “within forty-five days of the filling of his consent” and “agree not to seek reelection” or accept reappointment for the next three years.
The judgment report also states that Musk will be required to, ‘comply with all mandatory procedures implemented by Tesla.’ This includes communication relating to the firm, like social media, press release, and even investor calls. The plan also asks to name two new independent directors. This term doesn’t come as a surprise since the court had already announced the verdict. Steven Peikin, co-director of the SEC’s Enforcement Division said in a press release, “Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms —including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties. The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”
Tesla started facing the issue when Musk tweeted that he is considering taking the company private at $420 per share. SEC considered this amount ‘a substantial premium’ to the firm’s trading price at the time. SEC also questioned Musk’s claim that funding for the transaction had been secured. The commission stated, “Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption.” At the end of the trial, Musk and Tesla agreed to settle the charges without accepting or denying any allegations from SEC.
The commission said that the settlement would be used to put the procedures and processes into place which will protect the stakeholders. Stephanie Avakian, co-director of the SEC’s Enforcement Division said, “The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight to protect investors.” It appears that Musk has already moved on from the issue and is now planning to create a giant anime mecha robot.