Elon Musk has reached a deal over fraud charges that will see him step down as electric automaker Tesla’s chairman of the board and pay a $20 million fine but stay on as CEO, US securities regulators said Saturday.
The agreement with the SEC eases pressure on Tesla’s embattled CEO, who faced potentially being barred from serving as an officer or board member of a publicly traded company as a result of the charges, which stemmed from a tweet by Musk about taking the company private.
“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” of $20 million each, the Securities and Exchange Commission said in a statement.
The SEC had charged Musk with securities fraud, alleging that he misled investors when he tweeted on August 7 that he had “funding secured” to privatise the electric automaker at $420 a share.
That caused a brief spike in Tesla’s share price, leading so-called short-sellers, who have been betting on the stock crashing for years, to lose millions.
The SEC said Musk’s statements on Twitter were “false and misleading” and that he had never discussed the plans with company officials or potential funders.
Musk said he later decided against the plan.
“When companies and corporate insiders make statements, they must act responsibly,” SEC Chairman Jay Clayton said.
Under the agreement — which Clayton said was “in the best interests of our markets and our investors, including the shareholders of Tesla” — Musk will be ineligible to serve as chairman of the board for a period of three years and will be replaced by an “independent chairman,” according to the SEC.