Tesla CEO Elon Musk reached a settlement with the SEC to settle “without admitting or denying the allegations of the complaint” over his August “$420” tweet.
Back in August, Elon Musk tweeted to the world that he had secured funding to take Tesla private again. Since then, the Securities and Exchange commission lodged a complaint against Musk stating that claim was false, and he did not in fact have funding secured.
Now, he has agreed to resign as chairman of Tesla’s board of directors and pay a $20 million fine in a settlement, according to recent reports. Separately, Tesla will also pay $20 million to settle part of the lawsuit that contended it failed to properly screen and address Musk’s tweet. An SEC press release states the money will be distributed to “harmed investors” in a court-approved process. As a publicly traded company, Nasdaq rules require Tesla inform the stock exchange before making a public announcement like Musk did. The SEC lawsuit also alleged he misled investors by failing to inform them before he sent the tweet.
According to a CNNMoney report, Musk stated, “I have always taken action in the best interests of truth, transparency and investors.” He called the SEC lawsuit “unjustified”. The settlement forces Musk to resign as chairman of Tesla within 45 days. He will remain on as Tesla’s CEO, despite his resignation as chairman. A spokesperson confirmed he is permitted to remain a member of the board. However, he cannot seek reelection as chairman for at least three years. Tesla also agreed to appoint two independent directors to the board to review Musk’s communications.
Tesla’s stock prices fell sharply on Friday after news of the lawsuit. However, it appears the company’s stock rallied Monday morning after news of the settlement.