Tesla CEO Elon Musk will step down as chairman of the electric automaker and pay a $20 million fine under a settlement reached with the U.S Securities and Exchange commission. Musk will remain CEO.
Musk will resign from his role as chairman of the Tesla board within 45 days of the agreement, which was filed Saturday. He has agreed to not seek reelection or accept an appointment as chairman for three years. An independent chairman will be appointed, under the settlement agreement.
Tesla will pay a separate $20 million penalty, according to the SEC. Musk doesn’t admit or deny wrong-doing as part of the agreement.
Tesla has also agreed to appoint two new independent directors to its board and establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications, according to the SEC.
“The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders,” Steven Peikin, co-director of the SEC’s Enforcement Division said in a statement.
The agreement marks the beginning of a new era of corporate governance for Tesla, which some shareholders have argued is too tightly controlled by Musk and others closely aligned to him.
The SEC filed a complaint Thursday in federal district court alleged that Musk lied when he tweeted on August 7 that he had “funding secured” for a private takeover of the company at $420 per share. Federal securities regulators reportedly served Tesla with a subpoena just a week after the tweet. Investigations can take years before any action is taken, if at all.
The SEC said in the complaint that Musk violated anti-fraud provisions of the federal securities laws. The commission has asked the court to fine Musk and bar the billionaire entrepreneur from serving as an officer or director of a public company.
Musk described fraud charges an “unjustified action” that has left him “deeply saddened and disappointed.”
Tesla and the board later issued a joint statement supporting Musk.
The complaint contained a number of eye-browing raising details, including he had talked to the board about an offer to take Tesla private as early as August 2 when he sent to Tesla’s board of directors, chief financial officer and general counsel an email with the subject, “Offer to Take Tesla Private at $420.”