Judge orders Tesla’s Musk, SEC to justify fraud settlement

Tesla Directors Propose James Murdoch To Succeed Musk As Chairman Report

The SEC alleged that Musk hadn't locked up the estimated $25 billion to $50 billion that it would have required to pull off that deal, and wanted to punish him by forcing him out as Tesla's CEO.

Musk derided the SEC as the "Shortseller Enrichment Commission" before snidely praising it for "doing incredible work".

Musk's dispute with the SEC originated on August 7, when Musk said he was considering taking Tesla private at $420 a share, and that he had already secured the funding. He also responded to several others.

Musk, who has long railed against Tesla's short sellers - investors who bet against the company - called the SEC the "Shortseller Enrichment Commission".

We can safely say that none of this is helping neither Musk or Tesla in the current situation. This of course, sent the shares soaring.

It was a Twitter post that began Musk's path to a settlement with the commission.

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After initially rejecting an SEC offer to settle the case, Musk relented two days after the fraud complaint against him and agreed to resolve the matter by having Tesla and Musk each pay a $20 million penalty, stepping down as Tesla's chairman and submitting to oversight about his communications about company news.

The settlements were related to Musk's infamous "funding secured" tweets regarding a potential move to take Tesla public.

A Tesla spokesman said the company had no comment on the tweet. The tweet could become problematic, given the SEC case.

"It probably doesn't affect the settlement between Musk and the SEC, because it does not deny wrongdoing and does not seem to be material company information", said former SEC enforcement official Alma Angotti, now serving as managing director of risk and compliance at Navigant Consulting, in an email.

Last week, Musk settled with the Securities and Exchange Commission, after federal regulators accused him of duping investors after tweeting that he had "funding secured" to take the electric carmaker private. U.S. District Judge Alison Nathan allowed one week for the two to provide the letter, and said that the court needs to make a "minimal determination of whether the agreement is appropriate", according to CNBC. Ryan White, an SEC spokesman, declined to comment. Short interest was $10.19 billion, with more than 33 million shares shorted, or almost 26% of the company's float. Musk is Tesla's largest shareholder, holding some 22% of the company's outstanding shares at the end of a year ago. The stock is down about 12% in 2018.

Emily McCormick is a reporter for Yahoo Finance.

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