Tesla's Musk mocks SEC as judge demands they justify fraud settlement

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Tesla's Musk mocks SEC as judge demands they justify fraud settlement

The Securities and Exchange Commission (SEC) has given Tesla just 45 days to find a new chairman.

The statement by the electric automaker's CEO alludes to "shortsellers", investors who have bet that Tesla shares will fall and who are frequently the subject of Musk's derision.

Later on 4th October, Musk responded to another user's tweet saying that short selling should be illegal by agreeing and describing short sellers as "value destroyers".

The agreement also called for two new independent directors to join Tesla's board. As a part of the settlement, Elon Musk has agreed to pay $20 Mn each to financial regulators and Musk will step down as the company's chairman but remain as chief executive.

Tesla shares declined by more than 2 per cent to $274.50 in extended trading after Musk's tweet.

Tesla Chief Executive Office Elon Musk speaks at his company's factory in Fremont, California, U.S., June 22, 2012.

Tesla and the SEC declined requests for comment.

"It bolsters the SEC's argument that to the extent he was misrepresenting the facts, that he was [tweeting] to screw with the shortsellers", Alma Angotti, a managing director at Navigant and former SEC senior counsel said.

Peter Henning, a Wayne State law professor who was formerly an SEC attorney, said: "It certainly shows his pique at having to settle". But that doesn't mean Tesla's board can't order Musk to tone done his Twitter act in the best interests of the company.

The lack of support from investors eventually led to his "grudging approval" to reach a settlement with the SEC. Musk said on Twitter.

While Musk wanted to fight the SEC, he reportedly had a change of heart when Tesla's stock plummeted almost 14 percent after the lawsuit was announced.

Musk has kept up his cryptic ways this week, tweeting out a music video by rap group Naughty by Nature for their 1991 hit song "O.P.P".

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