Tesla shares up after deal with SEC

Shares of Tesla jumped nearly 16% on Monday after chief executive Elon Musk settled with the US Securities and Exchange Commission (SEC) over charges of misleading investors, heading off moves to force him out.

Tesla shares sank last week after the SEC filed a lawsuit accusing Musk of securities fraud and demanding the Silicon Valley billionaire be removed from his role as chief executive.

Investors worried that a long-drawn out fight with the regulator would see Tesla lose its talismanic leader, undermine its ability to raise capital and cripple operations as it ramps up production of its crucial Model 3 sedan.

According to the settlement, Tesla and Musk will pay $20m (R284m) each to financial regulators and Musk will step down as chair but remain as chief executive.

Analysts expect Wall Street will now be able to focus more on production numbers for the Model 3 this week, with the worst-case scenario of Musk being ousted off the table.

They also hoped the row would cap several months of volatility around Tesla’s shares driven in part by a series of rows over Musk’s tweets.

“We view Elon Musk and Tesla’s settlement with the SEC as a positive change, as it should improve corporate governance and allow [an] investor focus squarely on the operations,” Canaccord Genuity analyst Jed Dorsheimer said.

Tesla’s settlement would help soothe investors calling for more oversight of Musk, experts said, even as it gives ammunition to short-sellers pursing separate cases and to a probe by the justice department. –