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That settlement must still be approved by a court, and does not end the Justice Department probe disclosed by Tesla into Musk's tweets or lawsuits by short-sellers and other investors alleging losses and securities law violations.
"The real worry for the company is not the SEC but private actions that follow a settlement like this," said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "By paying that size fine, it bolsters investors"' claims over stock market losses, he said.
Investor claims could result in substantial settlements in cash or equity, Elson said. An equity settlement could end up diluting Musk's roughly 19 percent stake in Tesla, further reducing his influence on the board.
Tesla and Musk ended up accepting harsher penalties than the SEC originally proposed to settle the claims, according to the person familiar with the deal. The SEC initially was ready to accept a fine of a few million dollars and Musk's removal as chairman for two years, but raised its demands after Musk balked at that offer, the person said.
Funny but the stock price is going up after the news of Musk being removed as Chairman. This shows that people don't think he is the second coming any longer of the stock would have fallen. How long can a company that is mortally wounded like this last?
I think you are reading the situation wrong, he could have been out entirely as both chairman and ceo. I think this reaction is because the market sees it as a positive that he is still there
The stock appears to be grinding down for the third day in a row.
I've quit paying attention to the daily news.
I still watch the chart even though its been off my trading list for awhile.
Everyone thinks Musk is so intelligent, but he has got to be the biggest idiot CEO out there. He is asking for a huge fine and/or jail time...remember, the DOJ investigation is still ongoing. He seems to be taking a page out of the Martin Shkreli playbook.
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