The Securities and Exchange Commission (SEC) has hammered out a deal which has seen electric car maker, Elon Musk, agree to give up his post as chairman of Tesla and pay a $20 million fine in a deal to settle recent charges brought against him.
Under the settlement which requires court approval, the CNN reports that Musk will be allowed to stay as chief executive of Tesla but must now leave his role as chairman of the board within 45 days.
According to court filings, Musk, will also not be allowed to seek re-election as board chair for the next three years.
He however accepted the deal with the SEC but ‘without admitting or denying the allegations of the complaint,’ the court document noted.
Separately though, Tesla agreed last Saturday to pay $20 million to settle claims that it failed to adequately police Musk’s tweet. The company also agreed to appoint two new independent directors to its board and establish a board committee to oversee Musk’s communications.
“The $40 million in penalties will be distributed to harmed investors under a court-approved process,” the SEC reportedly said in a press release, even though Tesla declined to comment.
The announcement from the SEC comes two days after the agency filed a lawsuit against Musk, claiming he misled investors. The suit centres on tweets Musk sent on August 7 in which he said he had secured funding to take Tesla private at $420 a share, causing the company’s stock to soar. But he had not secured the funding, the SEC said.
In this regards, the lawsuit sought to ban Musk from serving as an officer or director of any publicly traded company, and Musk called the suit ‘unjustified.’
He said: “I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”
Citing unnamed sources, CNBC however reported that the agency filed the suit on Thursday after Musk refused an earlier settlement offer.
CNBC reported that under that deal, Musk would have had to pay a ‘nominal fine’ and leave his role as chairman for two years. He chose not to accept the terms because “he felt that by settling he would not be truthful to himself.”
It is also still unclear if or not the Department of Justice will file criminal charges against Musk. Though Tesla reportedly confirmed earlier that the DOJ was investigating whether Musk’s comments about taking his company private constituted criminal activity.