Lucy Nicholson / Reuters
- Tesla shares were up more than 15% Monday on the news Tesla CEO Elon Musk had settled fraud charges with the US Securities and Exchange Commission.
- Musk will neither admit nor deny the allegations, including that he knowingly misled the public, and he has agreed to step down as Tesla’s chairman for at least the next three years. Both Musk and Tesla will also pay $20 million fines.
- Watch Tesla trade in real time here.
Tesla is ripping higher Monday morning on word CEO Elon Musk settled fraud charges with the Securities and Exchange Commission. Shares were up more than 15% Monday, trading at about $305 apiece, and have made back nearly all of the losses that occurred Friday in the wake of the SEC’s lawsuit against Musk.
The SEC sued Musk last week, accusing him of making “false and misleading statements” in tweets on August 7 claiming he had “funding secured” to take the electric-car maker private at $420 a share. The SEC said Musk knew he had no such deal and accused him of knowingly misleading the public.
As part of the settlement, Musk will neither admit nor deny the allegations while agreeing to step down as chairman for at least three years. Both Musk and Tesla will also pay $20 million fines.
While Monday’s rally is good news for Tesla shareholders, it will surely be painful for short sellers, or those betting against the stock. That group made more than $1 billion as shares plunged nearly 14% on Friday, but those who didn’t cover their positions were set to see a large portion of their gains wiped away at Monday’s opening.
And that is likely to give Musk a reason to celebrate. He has long despised those betting against Tesla shares. In its complaint, the SEC noted Musk’s dismay for that group of investors.
From the complaint:
“For example, on May 4, 2018, Musk tweeted, ‘Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.’ On June 17, 2018, Musk tweeted that short sellers ‘have about three weeks before their short position explodes.'”
Tesla shares were down 14.59% this year through Friday.