Tweet storm: Musk quits as chairman over false claims

CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne California

According to the existing information, Elon Musk has 5 days to leave the post.

According to analysts, the settlement is probably the best thing for both the SEC and Musk and Tesla, because the SEC is showing it can act to enforce change in protecting shareholders, while Musk-removed as chairman-will keep its CEO role at Tesla: a role analysts and Tesla believers see as crucial for the company.

Coming under pressure from his lawyers and investors of Tesla, tech billionaire Elon Musk has agreed to step down as chairman of the company for three years and pay a $20 million fine in a deal with the U.S. stock market regulatory authority, Securities and Exchange Commission (SEC), to resolve securities fraud charges.

The charges come after Musk claimed in August via a series of tweets that he was planning to take the electric auto maker private, and implied that such a move was imminent with "funding secured".

It is set to release third quarter production numbers that will show whether the production level it reached at the end of the second quarter - when it produced 5,000 Model 3 cars a week - was a blip or sustainable. The funding had not been secured.

Shares of the company were up 14.9 percent at $304.19.




Lawyers say the settlement and size of the fine may give more ammunition to short-sellers pursuing separate cases against Mr Musk for manipulating the company's shares as well as to a probe by the Justice Department.

"The standard of proof for any potential criminal charge is higher than that of a civil case, which the SEC had", said Jay Dubow, a former branch chief in the SEC's enforcement division.

Musk's dispute with the SEC arose from an August 7 tweet in which Musk claimed to have "funding secured" to take the company private at $420 per share.

Tesla will now be appointing two new independent directors to its board.

"[Musk] had way too much control over the boardroom and the company", he said, adding it was an unusual situation that the entrepreneur was chairman, CEO and also Tesla's largest shareholder. Musk has said that he expected Tesla to achieve positive cash flow and profitability in the quarter, which ended on Sunday.

In emails leaked to CNBC, Musk hinted that Tesla was "very close" to being profitable and told staff to "ignore the distractions".

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