Musk’s controversy with SEC started from a tweet in which Musk claimed to have “funding secured” to take Tesla private $420 per share. The SEC eventually sued Musk for securities fraud on Thursday. Musk initially vowed to fight the charges but backed out after Tesla’s stock was down by 14% on Friday and settled the case on Saturday.
In the settlement with the SEC, Musk requires him to give up his position as chairman of Tesla’s board for three years. The company also requires to appoint two additional board member. Musk will continue as CEO but the SEC aims to give Tesla’s board more independence from Musk.
Musk and Tesla each must have to pay $20 million in Fines, which will be distributed among traders harmed by the tweets.
This weekend’s legal drama came as Tesla was scrambling to wrap up its pivotal third quarter. Musk has said that he expected the company to achieve positive cash flow and profitability in the quarter.
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