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Elon Musk slams SEC as US judge demands explanation for fraud settlement

The US judge must approve the deal between Musk and the SEC
Both sides until October 11 to give the court their explanation through a joint statement

Embattled Tesla Inc (NASDAQ:TSLA) chief executive Elon Musk slammed the US Securities and Exchange Commission just when a US district court judge ordered him and the SEC to explain by next week why the deal they forged to settle the lawsuit the government had filed against Musk is "fair and reasonable."

Musk renamed the SEC in a tweet as the Shortseller Enrichment Commission. There was no immediate reaction from the SEC.

Judge Alison Nathan gave both sides until October 11 to give their explanation through a joint statement.

"The Court has a duty to ensure the proposed consent judgment is fair and reasonable," the judge wrote in the order.

READ: Elon Musk and Tesla settle fraud charges with SEC, to pay $40M fine

The judge must approve the deal where Musk agreed to pay a $20 million fine and resign as chairman of Tesla over his tweet in early August to take the company private and that funding had been secured.

Musk had jolted financial markets with the tweet. He eventually abandoned the plan and was sued by some market participants for misleading investors about having the funding for his go-private plan.

Former federal prosecutor Jay Hulings said in a report by CNBC: "It's odd given the nature of this settlement. If there is a class action, it's common. But just for SEC enforcement action, particularly with a big fine, it's unusual."

Federal courts have rejected SEC settlements in the past if the judge thinks they are too lenient, the report added.

Separately, the Wall Street Journal said billionaire businessman Mark Cuban talked with Musk for 15 minutes and convinced him to take the deal.

Safety second

In other news, Consumer Reports said the Cadillac Super Cruise was the top-rated partially automated driving vehicle over Tesla because it does the best job of balancing high-tech capabilities with ensuring that the car is operated safely and that the driver is paying attention.

In the rankings, Tesla's Autopilot came in second, followed by Nissan/Infiniti's ProPilot Assist and then Volvo's Pilot Assist System.

“We have been evaluating these systems on a case-by-case basis for a few years, but we are at a tipping point where they are now going mainstream,” said Jake Fisher, director of auto testing at Consumer Reports.

“Stacked up against each other, you can really see significant differences. The best systems balance capability with safeguards - making driving easier and less stressful in the right situations. Without proper safeguards, overreliance on the system is too easy, which puts drivers at risk,” he added.

Tesla said in its 3Q vehicle safety report that "we’ve registered one accident or crash-like event for every 3.34 million miles driven in which drivers had Autopilot engaged."

"We are working hard to make our cars the safest and most capable cars on the road in terms of passive safety, active safety, and automated driving," the electric carmaker said.

Contact Rene Pastor at [email protected]

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