Today at 12:12 PM ET, Tesla stock (TSLA) was trading on a positive note with a 3.6% gain for the day. The stock ended last week with a massive loss of 14.0% after the company reported bigger-than-expected losses for the first quarter on April 24. Over the last few months, Tesla CEO Elon Musk’s legal battle (VTI) with the SEC has taken a toll on the company’s stock price. However, the dark clouds seem to be fading. Let’s take a closer look.
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Elon Musk versus the SEC
According to a recent Reuters report, Musk and the SEC have reached a deal to settle the legal battle triggered by Musk’s February 19 tweet relating to Tesla’s 2019 guidance. The report claimed that Musk has agreed “to submit his public statements about the company’s finances and other topics to vetting by its legal counsel,” citing a court filing from April 26. Nonetheless, the deal still requires the court’s approval.
In February, the SEC asked the court to hold Musk in contempt for his tweet. However, Alison Nathan—a federal judge—asked Musk and the SEC on April 4 to try to settle the case, saying, “My call to action is for everyone to take a deep breath, put your reasonableness pants on and work this out,” according to a Courthouse News report.
In 2018, Musk had to step down as Tesla’s chairman after being charged with securities fraud for misleading tweets by the SEC. As a part of the settlement with the regulatory authority, Tesla was required to “put in place additional controls and procedures to oversee Musk’s communications,” including his tweets.