Tweet storm: Musk quits as chairman over false claims

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US securities regulators settled a lawsuit against Musk alleging that he made false and misleading statements about plans to take the company private in August.

In a statement, the SEC added that the settlements are subject to court approval and that they would also require comprehensive corporate governance and other reforms at Tesla.

Tesla in recent years has become one of the most valuable American auto maker, with its stock worth more than $50 billion. On Friday, its stock dropped nearly 14 per cent.

Tesla is seeking to ramp up production of its Model 3, the mass-market vehicle seen as a key to the automaker's future.

Short sellers, meanwhile, have targeted the company, saying it needs to raise billions of dollars more in financing, has woeful quality control and is run by an erratic CEO.

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An army of Tesla-owning volunteers swooped in over the weekend to help deliver cars to new buyers while Musk cheered on his employees, telling them in emails to "ignore all distractions" and that they were on the cusp of "an epic victory beyond all expectations". In the Los Angeles community of Marina del Rey, a steady stream of customers arrived while tractor trailers pulled in to unload vehicles that had been stored in Burbank.

Tesla stock (NASDAQ:TSLA) is exhibiting a strong recovery on Monday, trading up 15.40% at $305.54 per share during the opening bell. Tesla's free cash flow in the second quarter totaled negative $739.5 million, bringing the company to a net loss of $717.5 million, the company reported in August. Tesla's Denver drivers' club president Sean Mitchell said on Twitter that a team of "30 volunteers were providing 40 [plus] hours helping deliver and teach new owners" about the cars' different features. Tesla is required to appoint two new independent directors to its board.

"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", Peikin added.

The settlement with the SEC won't be the end of the matter, though, as Musk is also facing a series of class action lawsuits relating to the tweets.

Musk will get to keep his job as chief executive officer and remain on the company's board, but must resign as chairman within 45 days and can't be re-elected to the role for three years as part of the accord reached Saturday with the Securities and Exchange Commission.

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