US carmaker Tesla and its CEO Elon Musk on Saturday each agreed to pay fines of $20 million (€17.2 million) fine and have Musk step down as chairman of the Tesla board for at least three years in a settlement over Musk's misleading tweets about the company's future, the US Securities and Exchange Commission said.

The SEC investigation was launched after Musk tweeted on August 7 that he had "funding secured" to privatize the electric automaker at $420 a share, causing a brief spike in Tesla's share price.

Read more: Elon Musk to take Tesla private?

"In truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies," the SEC wrote.

The SEC filed securities fraud charges earlier this week seeking to remove him as CEO for misleading investors. The SEC also noted that his tweets caused significant market disruption.

Under the settlement, which is subject to court approval, Musk will be allowed to remain CEO of the electric automaker. Tesla must also hire an independent chairman to oversee the company and two "independent directors" will also be appointed. In the agreement, Tesla and Musk did not admit to or deny the SEC's allegations.

The fraud case was the latest in a string of incidents to bring negative attention to Musk and his company, including the Tesla CEO smoking marijuana during a podcast interview and labeling a man involved in the Thailand cave rescue as a "pedo guy," a statement for which Musk is being sued for libel and slander.

Tesla's stock fell 14 percent on Friday after the SEC filed its lawsuit, erasing more than $7 billion in shareholder wealth.

law/sms (AFP, AP, dpa)