Tesla chief executive Elon Musk told the electric car company that he plans to purchase $20 million of common stock during the next open trading window, according to a filing related to the CEO’s settlement with the Securities and Exchange Commission.
“Separate and apart from the settlement, Elon has notified Tesla that he intends to purchase from Tesla, and Tesla expects that it will issue and sell to Elon, $20 million of Tesla’s common stock during the next open trading window at the then-current market price,” the filing read.
Tesla shares rallied 2 percent in premarket trading Wednesday following the filing. Musk is the largest shareholder in Tesla, holding more than $9 billion worth of the stock or more than 33 million shares before Wednesday’s announcement. The CEO bought $24 million worth of Tesla in June and $9.9 million in May, according to InsiderScore.com.
Tesla shares are down 11 percent in 2018.
The 8-K filing also detailed Tesla and Musk’s settlement with the SEC. A judge approved Tesla andMusk’s settlement with the SEC on Tuesday over allegations that Musk committed fraud when he said tweeted earlier in the year that he had secured necessary funding to take the automaker private.
The deal, viewed as a positive development for the embattled Palo Alto, California-based Tesla, requires Musk to pay a $20 million fine and step down as Tesla chairman for a period of at least three years. The company is also obligated to monitor the CEO’s statements to the public concerning the company on Twitter, blog posts or any other medium.
The company will also appoint two additional independent directors to the board within 90 days of the filing of the settlement documents.
Musk tweeted in August that he was debating taking Tesla private, telling his followers on Twitter, “Funding secured.” The tweet sparked a scandal for Tesla and sent shares through a bout of volatility for weeks.
Following the ensuring firestorm, Musk later said conversations with the Saudi Arabian sovereign wealth fund left him confident funding was assured at his proposed price of $420 per share. The SEC sued Musk on Sept. 27 for securities fraud.