Elon Musk has reached a settlement with the Securities and Exchange Commission (SEC) in the States regarding charges of securities fraud brought against him by it. Tesla was also charged with “failing to have the required disclosure controls and procedures relating to Musk’s tweets”.

The settlement means that Elon Musk will be stepping down as Tesla’s chairman, though he will remain the company’s CEO, and Tesla will be appointing additional independent directors. In addition, Musk and Tesla have agreed to pay $40 million in penalties.

In case you’ve been buried under rubble for the past few months, Musk was in hot water over a tweet where he claimed that he had secured funding needed to take Tesla private. The SEC’s statement announcing the settlement explains that “…Musk’s misleading tweets caused Tesla’s stock price to jump by over six percent on August 7, and led to significant market disruption”

Am considering taking Tesla private at $420. Funding secured. — Elon Musk (@elonmusk) August 7, 2018

The SEC’s co-director of the Enforcement Division said “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”.

Musk is required to step down from his position as Tesla chairman within 45 days and will not be able to hold the post again for a period of three years. Both he and Tesla are on the hook for $20 million (each) in penalties. That’s… not a small amount of money.

Read the full SEC announcement here.

Source: SEC via The Verge