Elon Musk has agreed to settle the securities fraud charge by the U.S. Securities and Exchange Commission (SEC) in a settlement that includes removing Musk as chairman at Tesla, and Musk and Tesla paying fines, the SEC said on Saturday in what analysts see as one of the fastest such settlements.
Tesla's shares soared 16% on Monday after chief executive Elon Musk settled a fraud lawsuit with the United States regulator.
After filing the lawsuit, SEC officials were anticipating a drawn-out legal battle, but settlement talks started up again late Friday after Musk's attorney Steven Farina sent an email asking to reopen the discussions.
Neither Tesla nor Musk admitted wrongdoing under the settlement, which was reached two days after the regulator sued the billionaire over his tweeted claims to have had the funding and investor support to buy out stockholders at $420 a share.
The company has recently been struggling to meet audacious production goals for its Model 3 sedan.
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Musk and Tesla each will pay a penalty of US$20 million, with the total US$40-million penalties to be "distributed to harmed investors under a court-approved process". The appointment of two new Board members, as well as the creation of a committee tasked with "placing additional controls and procedures to oversee" Musk's communications, were warmly received by the Tesla community as well.
Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.
Tesla did not immediately respond to requests for comment.
Nelson told FOX Business the settlement, which is still subject to court approval, "reflects certainty Musk is going to remain with the company in the CEO role". Later in the weekend, he added that "we are very close to achieving profitability and proving the naysayers wrong, but to be certain, we must execute really well" on Sunday.