Tesla CEO Elon Musk will pay a $20 million fine and step down as chairman of the company's board under a settlement with the US Securities and Exchange Commission over alleged securities fraud, the SEC said Saturday.
Under the settlement, Musk will remain CEO of Tesla, according to various media reports. A related settlement, also announced Saturday, calls for Tesla to pay another $20 million. In addition, according to an SEC release, the settlements include the following requirements:
- Musk will be replaced as board chairman by an independent chairman and be ineligible to be re-elected to that position for three years.
- Tesla will appoint two new independent directors to its board.
- Tesla will create a new committee of independent directors and establish added controls and procedures to oversee Musk's communications.
- The total of $40 million in penalties will be handed out to harmed investors under a court-approved process.
an Aug. 7 tweet in which he told his 22 million followers that he was poised to take the company private. He later backtracked on that statement.on Thursday, regarding
"Musk's false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla's stock and resulting harm to investors," the SEC said in the complaint.
The agency's suit had sought to have Musk "prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act."
Musk and Tesla have now settled the SEC's charges without admitting or denying the agency's allegations.
"The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors," Stephanie Avakian, co-director of the SEC's Enforcement Division, said in the agency's release.
Neither Tesla nor the SEC immediately responded to a request for comment.
First published Sept. 29, 3:14 p.m. PT
Update, 4:12 p.m.: Various information added throughout since original publication.