Elon Musk Settles With SEC, Agrees To Step Down As Tesla Chairman

Enlarge this image toggle caption Patrick T. Fallon/Bloomberg via Getty Images Patrick T. Fallon/Bloomberg via Getty Images

Updated at 1:02 a.m. ET Sunday

Elon Musk, Tesla's chief executive, has reached a deal with the Securities and Exchange Commission to settle a securities fraud charge brought against him on Thursday, the agency announced on Saturday.

Under the terms of the settlement, Musk has agreed to step down as chairman of the Silicon Valley-based company, but will remain in his post as CEO.

Tesla and Musk will each pay a separate fine of $20 million, the SEC said in a press release, and Musk will resign as chairman within 45 days. After that, he'll be ineligible to be re-elected chairman for three years.

The resolution comes two days after the SEC sued Musk in federal court for fraud, alleging that he misled investors when he announced on Twitter last month that he had "funding secured" to take the electric-car company private at $420 a share. Musk later admitted that the share price — a nod to marijuana culture — was a calculated stunt meant to amuse his girlfriend, the musician Grimes.

As NPR's Vanessa Romo reported on Thursday:

The court documents note the calculation resulted in a price of $419, but that Musk later admitted he had added the extra dollar — $420 — "because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it funny, which admittedly is not a great reason to pick a price.' "

The SEC says that Musk and Tesla agreed to the deal without admitting or denying the allegations brought against them.

The day after the SEC filed its lawsuit, Tesla's stock sank 14 percent, dissolving more than $7 billion in shareholder returns. Since the Aug. 7 tweet, Tesla's stock has fallen 30 percent, closing Friday at $264.77, according to The Associated Press.