Elon Musk to give up role of Tesla chairman

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Tesla saw its stock price plunging after the SEC filed a lawsuit against Elon Musk over his now infamous "funding secured" tweet.

Under the agreement - which Clayton said was "in the best interests of our markets and our investors, including the shareholders of Tesla" - Musk will be ineligible to serve as chairman of the board for a period of three years and will be replaced by an "independent chairman", according to the SEC.

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

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The settlement comes just two days after the SEC sued Musk for fraud and sought to block the way of entrepreneur from running affairs of Tesla or any other publicly-traded company.

The electric vehicle maker is expected to report third-quarter production numbers on Tuesday, following a period of turbulence, including a run-in with securities regulators that culminated in Musk being ousted as Tesla's chairman and hit with a multimillion-dollar fine.

Investors are cheering Tesla's deal with the SEC that keeps Elon Musk as the CEO.

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The settlement with the SEC won't be the end of the matter, though, as Musk is also facing a series of class action lawsuits relating to the tweets.

"We believe Musk's settlement with the SEC is positive for all stakeholders and should allow TSLA to return its focus to producing quality cars", Baird analyst Ben Kallo said. Tesla is required to appoint two new independent directors to its board. Tesla itself has also been slapped with a $20 million fine by the SEC, making Musk's tweet one of the most expensive in history.

It was precisely his Twitter postings about his idea to remove Tesla from the stock market, which led him now to resign from the post of chairman of Tesla's board of directors. Musk said August 7 in a company blog post that he was considering taking Tesla private at $420 per share, representing a 20% premium over the stock price following the company's second-quarter earnings release. Tesla's Denver drivers' club president Sean Mitchell said on Twitter that a team of "30 volunteers were providing 40 [plus] hours helping deliver and teach new owners" about the cars' different features. Musk, 47, told employees in an email Sunday that the company was "very close to achieving profitability and proving the naysayers wrong", but still needed to execute on the last day of the quarter.

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