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Elon Musk has been fined $20million - more than £15million - and has lost his Tesla chairmanship in a settlement on fraud charges.

Musk, the CEO of Tesla, had been accused of posting a series of "false and misleading" tweets about the trading status of the electric car firm.

The allegations relate to messages Musk posted to his 22 million followers on the social media site suggesting he would take Tesla private at $420 per share - a substantial premium to its trading price at the time.

Musk claimed funding for the deal had been secured and that the only remaining uncertainty was a shareholder vote.

The billionaire has now reached a settlement with the Securities and Exchange Commission (SEC), which is the US government's business watchdog.

(Image: AFP) (Image: REUTERS)

Musk will remain the company’s chief executive but step down as chairman within 45 days under the terms of the agreement.

He has been barred from that position for three years.

Tesla will also name two new independent board directors as well as paying a $20 million fine.

The SEC sued Musk on Thursday after claiming that he lied when he tweeted this summer that he had secured funding to make Tesla private.

Stephanie Avakian, Co-Director of the SEC’s 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."

(Image: REUTERS)

Steven Peikin, Co-Director of the SEC’s Enforcement Division added: “As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms —including an obligation to oversee Musk’s communications with investors—and both will pay financial penalties.

“The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”

Thursday's lawsuit makes Musk one of the highest-profile executives to be accused by the SEC of securities fraud.

The SEC does not have criminal enforcement power.