Tesla CEO Elon Musk is gambling not only with his job but with the electric auto maker's stock market value by not settling with the Securities and Exchange Commission, Columbia Law School professor John Coffee told CNBC on Friday.

"Mr. Musk is gambling with the shareholders' money. Probably 30 percent or more of the value of Tesla depends upon his presence as CEO," Coffee said on CNBC's "Closing Bell."

"I can't imagine a CEO doing anything more dangerous than rolling the dice with possibly as much as a third of the value of the company at stake," he added.

Neither Musk nor Tesla were immediately available for comment.

Musk is being sued by the SEC for fraud, according to court documents filed Thursday, in relation to an Aug. 7 tweet in which Musk said he was considering taking Tesla private, adding: "Funding secured."

The take-private idea was abandoned on Aug. 24.

Shares of Tesla closed down 13.9 percent Friday, their worst session since November 2013.

Tesla and the SEC were close to a no-guilt settlement, but Musk pulled out at the last minute, according to reporting by CNBC's Andrew Ross Sorkin.

Under the deal, Musk and Tesla would have had to pay a nominal fine and the CEO would not have had to admit any guilt, said CNBC's David Faber, citing sources. But those sources said Musk would have been barred from being chairman for two years and Tesla would have to appoint two new independent directors.

Many experts have said the settlement the SEC offered seems reasonable.

Coffee, who served as a member of an SEC advisory committee, agreed: "All it means is giving up the post as chairman; he's still in control."

Coffee said the board needs to push Musk to accept it.

"They've sat on the sidelines as a passive bystander over the last six months, but they should be sitting down with Mr. Musk and telling him it's time for him to be mature and settle with the SEC," Coffee added.

Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management, agreed Musk is "critical to the valuation" of the company. For the sake of Tesla, he urged the board to devise a plan to keep Musk there but rein him in.

Sonnenfeld called the board's decision to pass up the SEC's "generous" deal as "completely as self-destructive as Musk is." He added, "What it tells us is this board, as a strategic plan, must be using the Jim Jones Jonestown suicide pact. They are drinking the Kool-Aid of the founder."

If he were to give in and settle with the government, Musk would guarantee Tesla a stable future, said Coffee. If not, Musk is making a bet he's almost guaranteed to lose, he added.

"[Musk] is insisting on rolling the dice on whether he can beat the SEC in the Southern District of New York, where the SEC almost never loses," Coffee said.

In a statement, the board said, "Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees."