SEC Lawsuit Against Musk Wiped $7.3 Billion From Tesla’s Market Value

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Musk did not found Tesla but provided early financing.

Musk will remain Tesla CEO after settling SEC fraud charges over his infamous "funding secured" tweet about taking the vehicle firm private. 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.

Tesla shares rebounded from last week's USA lawsuit over Elon Musk's take-private tweets, as a settlement ensured the billionaire will keep calling the shots at the carmaker he's said is on the verge of profitability.

In a follow-up company blog post issued August 13, Musk explained that his assertion of having "funding secured" was based on multiple encounters he had with the Saudi Arabian sovereign wealth fund, where he felt there was "no question that a deal with the Saudi sovereign fund could be closed".

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

Under the agreement - which Clayton said was "in the best interests of our markets and our investors, including the shareholders of Tesla" - Musk will be ineligible to serve as chairman of the board for a period of three years and will be replaced by an "independent chairman", according to the SEC.

Elon Musk told Tesla employees that the company was on the cusp of making money, hours after he and the carmaker reached a settlement with the U.S. that steps up oversight of the chief executive officer's communications of material information. A more assertive board could provide the kind of tighter oversight that many legal experts, and Tesla investors, say is overdue for a company of Tesla's market value. Tesla shares plummeted 14% on Friday, the biggest drop in nearly five years.

"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", said SEC enforcement division co-director Steven Peikin.

Tesla shares took a steep dive last Friday, plunging 13.90% amidst news of the SEC's lawsuit against the outspoken CEO. Shareholders are betting the company is on the cusp of stemming losses and cash burn thanks to its lower-priced Model 3 sedan.

Musk has courted several controversies in recent times by making a series of unusual public comments or appearances, including an Internet interview in which he appeared to smoke marijuana.

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