US judge approves settlement over Elon Musk taking Tesla private tweets
A US judge has approved a proposed settlement deal between Tesla, its CEO Elon Musk, and the US Securities and Exchange Commission (SEC).
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Judge Alison Nathan of the US District Court for the Southern District of New York approved the deal, as reported by Reuters, which now resolves claims of securities fraud.
The matter at hand was a single tweet sent by Musk in August which suggested that automaker Tesla may be taken private.
The news was a shock to shareholders and the general public alike, and although members of the Tesla board said a day later that the entrepreneur had raised the issue in meetings, the tweet's evaluation of the company prompted SEC to investigate.
"Am considering taking Tesla private at $420. Funding secured, " Musk said in the tweet. "Shareholders could either to sell at 420 or hold shares & go private."
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The "$420" suggestion raised Tesla far beyond current market cap and by saying "funding secured," Musk was potentially implying that talks had taken place with investment firms or capital providers -- all of which was proclaimed on social media rather than through official channels.
While reports have suggested the $420 mark was nothing more than a bid to amuse Musk's girlfriend, SEC did not find it funny and considered the tweets "false and misleading."
As such, the US watchdog planned to sue Musk for alleged securities fraud. A settlement was then reached which required Musk to pay $20 million, with Tesla paying a further $20 million.
Musk will retain his position as chief executive but will need to step away from his role as chairman for a minimum of three years as part of the agreement.
In the hopes of muzzling Murk's social media activity which may impact Tesla investors again in the future, SEC has also required agreement from Tesla to appoint an independent committee to control Musk's communications in relation to the company.
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Following the agreement in principle of the settlement, pending court approval, Musk then appeared to bait SEC with yet another tweet.
"Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!," Musk tweeted.
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Despite what appears to be Musk's irritation in light of the case, the deal has now been agreed and will be followed through.
A Tesla spokesperson confirmed the news but declined to comment further.
The agreed settlement may signal an end to a tumultuous time for Tesla investors, which have seen the automaker's share price slide, climb, and slide again due to the SEC's case.
At the time of writing, Telsa shares (TSLA) have reached $276.59, an increase of 6.55 percent on market close. However, this price is still far under $341.99, the market close share price the day before the time of Musk's original tweet.