Tesla and SpaceX CEO Elon Musk has reportedly reached a settlement with the Securities and Exchange Commission (SEC) after his abandoned attempt to take Tesla private.

As a part of the settlement, which is still subject to court approval, Musk will have to step down from his role as chairman at Tesla for at least three years and pay a civil penalty of $20 million. He will remain as CEO of Tesla during that time period, but Tesla must also appoint two independent directors with no ties to the company to its board.

"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,” said Steven Peikin, who co-directs the SEC's enforcement division.

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Tesla will also pay a separate fine of $20 million, according to the press release. The violations stem from Musk's tweet last month stating that he planned to take the company private at $420 per share, claiming that he had secured funding for such a deal.

According to reports, Musk never had obtained a specific financing deal with his partners and had rounded up the trading price of Tesla's stock to reference "420," a joke about marijuana.

“Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions,” the SEC wrote in its complaint, which was reported just days ago.

Musk previously responded to the SEC lawsuit on Friday, calling the charges “unjustified.” Tesla's shares dropped more than 12 percent following news of the lawsuit on Friday.

-Aris Foley contributed reporting. Updated at 1:15 p.m. on 9/30.