The US Securities and Exchange Commission (SEC) has reached a settlement with Elon Musk which will see him step down as chairman of the company he founded, Tesla. Furthermore, both the company and Musk have been fined $20m respectively as part of the settlement.
The settlement followed the announcement by the SEC that it would be suing Elon Musk following his August 2018 tweet which alluded to active plans to de-list the electric car company, which stated: "Am considering taking Tesla Private at $420. Funding secured."
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This tweet in question is what the SEC determined to be "false and misleading" and the basis of its suit against Musk and his company. Musk had not discussed the decision to delist with his board members and he came to the figure of $420 a share through a questionable mix of assumptions on how one calculates a firms "standard premium" and in reference to the numbers relevance in cannabis culture.
Despite initially calling the suit "unjustified", Musk and Tesla reached a settlement on Saturday, less than a week after the suit was filled. The agreement, which is still subject to approval by a court, will insist Musk step down from his position as chairman within 45 days for no less than three years and pay a $20m fine. Tesla, along with also paying a $20m fine, will be hiring two new, independent directors to the board and will have to start monitoring Musk's public communications more closely.
Stephanie Avakian, co-director of the SEC's enforcement division commented on the conditions of the agreement in a statement, claiming that they "are specifically designed to address the misconduct at issue by strengthening Tesla's corporate governance and oversight in order to protect investors."
Tesla has declined to comment on the settlement, but neither it, nor Mr Musk have been required to admit to any wrongdoing. However, following the settlement, Tesla's stock rose by as much as 18% indicating investors approval of the settlement that has been reached.