Tesla stock skyrockets while Musk mocks the SEC with a tweet

Tesla shares rose more than 16% early Monday, following the signing by Elon Musk of an agreement with the Securities and Exchange Commission this weekend. Monday's gains erased the 14% drop on Friday after the SEC filed a lawsuit on Thursday night.

The dispute between Musk and the SEC stems from a tweet of August 7 in which Musk claimed to have secured "secured financing" in order to privatize the company at $ 420 per share. But it soon became clear that Musk's funding commitment – supposedly coming from Saudi Arabia's sovereign wealth fund – was at best informal. The SEC eventually sued Musk for securities fraud on Thursday. Musk initially promised to fight the charges, but after Tesla's stock cracked on Friday, Musk went back and settled the case on Saturday.

While Musk technically capitulated to the SEC this weekend, he said Monday morning that he had no intention of behaving like this:

Naughty by Nature https: //t.co/muZdxJWjyZ

– Elon Musk (@elonmusk) October 1, 2018

The settlement between Musk and the SEC requires him to relinquish his position as Chairman of the Tesla Board of Directors for three years. Tesla will also have to appoint two other independent Elon Musk board members. Musk will continue to be CEO, but the goal of the SEC is to give Tesla's board of directors more independence from Musk – and therefore to submit Musk to a more rigorous control.

Musk and Tesla must each pay a $ 20 million fine, which will be distributed to merchants who have been hurt by the tweets.

The legal drama of this weekend took place as Tesla struggled to complete its crucial third quarter. Musk said he expects Tesla to realize positive cash flow and profitability during the quarter, which ended on Sunday. Reaching these milestones would be a rebuke for many Wall Street who insisted that Tesla would need to raise additional funds in the coming months.

"Another hardcore weekend and we'll all be victorious," Musk wrote in an email to employees. Later in the weekend, he added that "we are about to achieve profitability and prove that the opponents are wrong, but to be sure, we must really execute well" Sunday.