CEO of Tesla, Elon Musk has agreed to pay a total of $20 million fine to the Securities and Exchange Commission and resign from the company's board of directors as a part of a settlement with the federal agency. Reportedly, the agreement filed in court on Saturday comes just two days after the SEC sued Musk for making false and misleading statements on Twitter about the possibility of turning Tesla into a privately traded company. The SEC has further imposed a fine of $20 million on Tesla itself which will be expected to appoint two new directors to the board for failing to have required disclosure controls and procedures relating to Elon Musk's tweets. The company will also put in place additional controls and procedures to oversee Musk's communications.
Reportedly, the regulators of the incident confirmed that both Tesla and Musk agreed to settle the charges without admitting or denying the SEC's allegations. The combined $40 million will be distributed among the investors who have been affected by the whole incident, under a court-approved process. In a statement, Stephanie Avakian, the co-director of the SEC's enforcement division, stated that the total package of remedies and relief announced that they are going to specifically address the misconduct by strengthening Tesla's corporate governance and oversight in order to protect investors.
Earlier, the federal government investigated Musk over a series of tweets of August 7 in which he claimed to make Telsa private at $420 per share.
Here's the tweet!
As per reports, due to the tweets, Tesla's stock price increased by more than 6%. In the complaint filed, SEC stated that tweets posted by him created a significant confusion and disruption in the market for Tesla's stock thus causing harm to the investors. Further, the settlement asks Musk to pay a civil penalty within 14 days and resign from his role as the chair of Tesla's board of directors.