Tesla stock soars as Musk taunts the SEC with a tweet

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As part of the settlement, Tesla will appoint an independent chairman, two independent directors, and a board committee to set controls over Musk's communications under the proposed agreement.

Mr Musk, whose tweets on August 7 on a plan to take Tesla private that was later abandoned, has tweeted only once since the settlement was announced - posting a music video by rap group Naughty by Nature.

Tesla's stock is up by more than 16 percent in early Monday trading after Elon Musk signed a deal with the Securities and Exchange Commission over the weekend. The agency also required that the company pay $20 million in penalties to settle separate claims related to Musk's use of social media.

Musk and Tesla were also fined $20million each.

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The SEC's lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors. Achieving those milestones would be a rebuke to may on Wall Street who have insisted that Tesla would need to raise additional funds in the coming months. Tesla had come under criticism for years prior to Musk's take-private episode for lax governance, though shareholders sided with the board in June by voting against an independent chairman proposal and approving the re-election of three directors.

"The $40 million in penalties will be distributed to harmed investors under a court-approved process", the SEC said.

Under the terms of the settlement, Musk and Tesla neither admit nor deny the SEC's allegations.

Many see the forced changes as being positive for Tesla, partly because the mercurial Musk will now have someone to answer to, and partly because his reduced role may allow the chronically overworked CEO to focus more.

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Stephanie Avakian and Steve Peikin, co-directors of the SEC's Enforcement Division, led the talks, taking the reins from the staff attorneys who worked the case, according to two people familiar with the matter.

Tesla analyst Garrett Nelson of CFRA Research upped his rating on the stock Monday morning to Hold, after downgrading it on Friday to Sell.

The settlement marked a swift end to the SEC's lawsuit, which was filed Thursday.

Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.

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