Tesla CEO Elon Musk will resign as chairman of the electric automaker and pay a $20 million fine under a settlement reached with the US Securities and Exchange commission (SEC).
In August, Elon Musk set off a catastrophic chain of events by tweeting that he was “considering taking Tesla private at $420. Funding secured.” Musk provided no financing details, and the Securities and Exchange Commission later determined that he never finalized any kind of deal with the Saudi sovereign wealth fund behind the ostensible buyout. Last week, it slapped him with fraud charges for making “false and misleading” statements and not complying with regulatory requirements.
Reportedly, Elon Musk has agreed to a settlement in which both he and Tesla will pay out separate $20 million fines, and Musk will step down as Tesla’s chairman for at least three years, however her will be allowed to remain the company’s CEO. Although Elon Musk has agreed to resign within 45 days, but has not yet formally done so.
In a statement, the SEC wrote:
The SEC also today charged Tesla with failing to have required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla has agreed to settle.
The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties.
Tesla shares have been hit hard since the SEC filed the lawsuit. On Friday, its stocks on Nasdaq had already closed down around 14% on Friday at $264 per share.