Technology

Tesla shares soar after Musk settles with regulator

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

The billionaire entrepreneur was fined $20m (£15m) and agreed to step down as chairman of the electric car-maker as part of the deal with the US Securities and Exchange Commission (SEC).

Shares in Tesla sank more than 14% on Friday, wiping more than $5bn (£3.8bn) from the company's market value after the SEC filed its suit, claiming Mr Musk issued "false and misleading" tweets about potentially taking Tesla private.

He told his 22 million Twitter followers on 7 August that he might take Tesla private at $420 per share and that there was "funding secured".

Investors were concerned a protracted legal battle and the loss of the charismatic chief executive could cripple its ability to raise money and ramp up production of its Model 3 sedan.

"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 operations," Canaccord Genuity analyst Jed Dorsheimer said.

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As part of the settlement, the company will appoint a new independent chairman, two independent directors and control Musk's communications.

The company's stock rose more than 16% to $307.85 in early trading in New York on Monday.

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