Tuesday, 20 November, 2018

Judge tells Tesla, SEC to justify settlement of fraud lawsuit

Wil James Murdoch be the new Chairman of Tesla? Elon Musk Twitter swipe at US markets regulator: 'Shortseller Enrichment Commission'
Scott Davis | 07 October, 2018, 08:42

A federal judge on Thursday gave Tesla Inc Chief Executive Elon Musk and the U.S. Securities and Exchange Commission one week to justify their settlement to resolve securities fraud charges against the head of the electric auto company. "And the name change is so on point!"

Musk has been open about his thoughts on investors who are betting against Tesla known as short-sellers.

Musk also dragged BlackRock Inc. into his long-running dispute with short sellers, claiming that the fund manager was reaping heavy profits by lending shares they hold to this group of investors.

At market close, Tesla stocks fell by 4.4 percent at $281.83 and slid by an additional 2.2 percent following the latest tweet by Musk.

The settlement agreements Musk and Tesla reached with the Securities and Exchange Commission don't include any kind of bar on Musk's continued service as a director of the vehicle company.

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

This pushed the SEC to sue Musk for securities fraud as the agency alleged "Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source".

The commission is asking the court for an order stopping him from making false and misleading statements along with repayment of any gains as well as civil penalties.




The settlement mandated that the company must implement "mandatory procedures and controls to oversee all of Elon Musk's communications regarding the Company made in any format".

The SEC had sought to remove Mr Musk from...

"It bolsters the SEC's argument that he is uncontrollable", Angotti said.

The settlement, which still must be approved by a federal judge, includes a provision meant to rein in the Tesla chief's much-criticized use of Twitter. Tesla and Twenty-First Century Fox were not immediately available for comment outside regular business hours.

She has asked Tesla and the SEC to send a joint letter to explain why the settlement is "appropriate" before she reviews the case.

"I think it is juvenile and sophomoric and narcissistic, but I don't think it has particular relevance to the subject of the lawsuit against him", said Harvey Pitt, the SEC chairman under President George W. Bush.

It comes just days after the billionaire agreed to step down as chairman and pay $20 million to the Securities Exchange Commission to avoid being charged with fraud for a tweet.

The deal also calls for Tesla to pay a $20 million fine and vet any social media posts by Musk that could have a material impact on the company's finances.

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