Tesla shares jump after SEC settlement leaves Elon Musk as CEO

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

"The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla - including Musk's removal as chairman of the Tesla board - and the payment by Musk and Tesla of financial penalties" of $20 million each, the Securities and Exchange Commission said in a statement.

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

The news of Tesla CEO Elon Musk settling with USA financial regulators sent the company's stock soaring Monday morning.

Analysts hoped the deal would cap several months of volatility around Tesla's shares driven by a series of tweets and public pronouncements by Musk, and allow investors to focus on the company's efforts to ramp up production.

In the immediate aftermath of the "funding secured" tweet, Tesla stock rose by six per cent.

The SEC said Musk's statements on Twitter were "false and misleading" and that he had never discussed the plans with company officials or potential funders.

Elon Musk is confident that Tesla Inc.

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In any case, the $40 million, which will be distributed to harmed shareholders after a court-approved process, are but a very small fraction of the more than $7 billion lost due to the whole debacle. Andrew Doane, who has a Model S sedan, Model X crossover and Model 3 vehicle and is president of the Tesla Owners Club of the Mid-Atlantic region, mustered club members to pull shifts at delivery hubs in Virginia and Maryland, and worked one himself.

Tesla in recent years has become one of the most valuable American auto maker, with its stock worth more than $50 billion.

According to the agreement filed on Saturday, Musk must resign as chair within 45 days.

Furthermore, it adds: "Despite notifying the market in 2013 that it intended to use Musk's Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk's tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk's tweets contained information required to be disclosed in Tesla's SEC filings".

"This weekend is the pivot point", he said, describing it as watershed moment not just for the company but for the shift away from the internal combustion engine.

Stephanie Avakian and Steve Peikin, co-directors of the SEC's Enforcement Division, led the talks, taking the reins from the staff attorneys who worked the case, according two people familiar with the matter.

Tesla shares took a steep dive last Friday, plunging 13.90% amidst news of the SEC's lawsuit against the outspoken CEO.

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