The settlement will require the billionaire to relinquish his role as chairman for at least three years, but he will able to remain as chief executive.
Shares of Tesla (TSLA) surged in early trading Monday after the SEC settled a lawsuit accusing the company's founder and CEO Elon Musk of defrauding investors when he tweeted last month that he was considering taking the company private.
After repeatedly falling short of its manufacturing targets, Tesla probably produced about 53,457 Model 3s in the third quarter, according to a Bloomberg Tracker that uses vehicle identification numbers and other inputs to estimate output in real time.
Tesla and Mr Musk will pay $20 million each to financial regulators.
Tesla jumped in pre-market trading after Elon Musk settled a U.S. lawsuit over his take-private tweet storm, reassuring investors that the billionaire will keep calling the shots at the electric-car maker he's said is on the verge of profitability.
Analysts from Cowen wrote in a note over the weekend that while the settlement would likely lead to a near-term bump for Tesla shares, it could leave Musk open to future litigation - including class-action lawsuits that have already been filed.
Loup Ventures Managing Partner Gene Munster noted that the SEC settlement is the best outcome possible from Elon Musk's "funding secured" fiasco. The SEC's complaint alleged that Musk had made "false and misleading" statements, with Tesla's share price having risen on the back of Musk's tweet.
Two new independent directors will be appointed to the board and a new committee of independent directors will be expected to put in place additional controls and procedures to oversee Musk's communications. Musk is Tesla's largest investor, holding a 20-percent stake in the company. 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.
"The new independent chairman and board members should dramatically improve corporate governance and widen the pool of potential investors", Baird's Kallo said. "We are very close to achieving profitability and proving the naysayers wrong, but to be certain, we must execute really well tomorrow (Sunday)".