Elon Musk will remain the chief executive officer of electric car manufacturer Tesla after reaching a deal with U.S. securities regulators.
Tesla and Musk have agreed to each pay $20 million U.S. to financial regulators after the Securities and Exchange Commission (SEC) charged Musk with fraud. Musk will also step down as Tesla’s chairman but remain as chief executive of the popular car-maker.
The SEC charged Musk, 47, with fraud, accusing him of misleading investors with tweets he sent on August 7 in which he said he was considering taking Tesla private and had secured funding to do so. The regulator had alleged in a lawsuit it filed last Thursday that the tweets had no basis in fact, and said the market chaos that ensued hurt investors.
The SEC charges resulted in $7 billion U.S. of value being lost from Tesla late last week, lowering its market value to $45.2 billion U.S., below General Motors Co's (NYSE: GM) $47.5-billion U.S. market capitalization.
In the settlement reached over the weekend, the SEC dropped its demand that Musk, who is synonymous with the Tesla brand, be barred from running the company, a sanction that many investors said would be disastrous for the future of Tesla.
Neither Musk or Tesla admitted or denied the SEC's findings as part of the settlement. Tesla and Musk did not immediately comment on the settlement over the weekend.
Musk must now step down as chairman of Tesla within 45 days and is not permitted to be re-elected to the post for three years. Tesla is required to appoint two new independent directors to its board.
Musk currently has nearly 23 million Twitter followers.
