Tesla shares soar after Musk gets ousted as chairman


Shares of Tesla Inc jumped 18 percent on Monday as signs it had met targets for quarterly auto production added to relief at Chief Executive Elon Musk's settling of a lawsuit with regulators that had threatened to force him out.

Mr Musk, Tesla's controversial co-founder and chief executive, bowed late on Saturday to demands from America's financial markets watchdog to relinquish his seat at the head of the board.

The message from the Tesla boss could bring some cheer to the workers as the last few weeks had been quite tumultuous for Musk who had on Saturday agreed to step down as chairman of the company for three years and pay a $20 million fine in a deal with the USA stock market regulatory authority, Securities and Exchange Commission (SEC), to resolve securities fraud charges. Musk will be able to continue as CEO, but the SEC's aim is to give Tesla's board more independence from Musk-and hence to subject Musk to more vigorous oversight. The SEC's lawsuit charged that the tweet, which caused Tesla's shares to jump, was misleading because he did not actually have the funding lined up for such a move.

Tesla's shares soared 16% on Monday after chief executive Elon Musk settled a fraud lawsuit with the U.S. regulator.

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Musk and Tesla must each pay $20 million in fines, which will be distributed to traders who were harmed by the tweets.

From the beginning of this case, the SEC requested as a penalty that Elon Musk had left the position of chairman from the board of Tesla, something that has now been achieved. Likewise, Tesla will pay another $20 million due to its failure to check whether Musk's announcements complied with the law. Later in the weekend, he added that "we are very close to achieving profitability and proving the naysayers wrong, but to be certain, we must execute really well" on Sunday.

While the 15-year-old company has never earned an annual profit, Tesla's CEO has vowed it's the verge of making money and stemming cash burn that's exceeded more than $1 billion in recent quarters.

Besides the settlement news, Tesla has another milestone this week. In addition to appointing an independent chairman, Musk will be ineligible to be re-elected as chairman for three years.