Tesla and Elon Musk have agreed to pay $20 million each to financial regulators and the billionaire will step down as the company’s chairman but remain as chief executive, under a settlement that caps a tumultuous two months for the car-maker.
The securities fraud agreement, announced by the Securities and Exchange Commission (SEC) on Saturday, will come as a relief to investors, who had worried that a lengthy legal fight would only further hurt the loss-making electric car company.
The SEC said Musk, 47, misled investors with tweets on Aug. 7 in which he said he was considering taking Tesla private and had secured funding.
The regulator had alleged in a lawsuit on Thursday that the tweets had no basis in fact, and said the market chaos that ensued hurt investors.
The SEC charges against Musk on Friday shaved about $7 billion off high-flying Tesla, knocking its market value to $45.2 billion on Friday, below General Motors Co’s $47.5 billion.
In the settlement, the agency pulled back from its demand that Musk, who is synonymous with the Tesla brand, be barred from running Tesla, a sanction that many investors said would be disastrous.