Yahoo Finance Elon Musk fraud settlement approved by US judge
Elon Musk’s settlement with a US regulator has been approved by a judge.
The Tesla chief executive is now under pressure to reveal his successor as chairman of the electric car and energy company after a deal was rubber-stamped by a court in Manhattan.
He had been sued by the US Securities and Exchange Commission after a tweet in which he said he planned to take his company private.
The message, sent on August 7, said he had secured funding at $420 (£317) a share. But the claim was questioned by the authorities, who established that the deal was not completed and said he had misled the public.
Court documents filed by the SEC also suggested that the $420 figure was a reference to drugs, though Mr Musk has denied this. April 20 is a significant date in cannabis culture.
He agreed to step down as chairman of the company, and he and Tesla must now pay $20m in fines within 14 days.
Tesla executives will also have to supervise his communication with the public, which takes place mainly via Twitter, where his personal account has 23m followers.
He will remain in post as chief executive but has to appoint a successor as chairman by the middle of next month.
James Murdoch, the outgoing chief executive of 21st Century Fox, currently a non-executive director of Tesla, has been tipped for the role.
However, Mr Musk denied this on Twitter last week, replying to a Financial Times story which made the claim saying “this is incorrect”.
Many thought he had put the SEC settlement in jeopardy when he attacked them on Twitter at the start of the month as part of a rant against short sellers, describing the regulator as the “short-seller enrichment commission”.
But both Tesla and the SEC reaffirmed the deal in a court filing last week, saying it would be in the best interests of investors.
The company is under pressure to turn a profit in its next set of financial results, due later this year.
Tesla’s last quarterly release in August showed it had lost $718m, but Mr Musk told analysts he expected the company to be profitable in future filings.
