Tesla shares sank in the US Friday, ahead of news the electric car maker and the US Securities and Exchanges Commission had reached an agreement over penalties, which will see Elon Musk step down as Chairman and also pay a hefty $20 million fine over his activities.
Tesla shares ended the US Friday session 13.90% lower at $264.77. However, the stock has surged over 15% in out-of-hours activity, post news of the settlement.
Tesla, SEC agreement
The SEC confirmed Saturday that it had reached a deal with Tesla and Musk over the tweets the CEO published during August about taking the car manufacturer private.
Musk will step down as chairman of the business – but remain in place as CEO. He will also pay the SEC a fine of $20 million for issuing communications regarding the company that were only base don assumptions, rather than firm agreements.
Meanwhile, Tesla has also been reprimanded and the firm must appoint two new, independent directors to join its board and also put in place a system where Musk’s company communications, including tweets, are overseen through a new control system.
Tesla will also pay its own, separate $20 million fine for its actions in this case.
SEC’s measures address misconduct at Tesla
In a statement detailing the agreement and measures that must be put in place at Tesla, the SEC said they were designed to improve Tesla’s governance.
“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.
“As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms —including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties,” added Steven Peikin, Co-Director of the SEC’s Enforcement Division.