Tesla CEO Elon Musk has accepted a no-guilt settlement with the United States Securities and Exchange Commission to avoid a court battle over a complaint filed last week which alleges securities fraud. As a result, Musk will resign his position as Tesla’s board chairman and pay a fine of $20 million.
Pursuant to the terms of the agreement, Musk will keep his title as CEO, however, must resign as “Chair of the Board of Directors of Tesla” within 45 days of the agreement. This resignation will remain mandatory for a minimum of three years, which the SEC may extend should it see fit. After that term, he is free to seek re-election to the board.
Musk’s $20 million settlement must be paid by him within 14 days of the judgment being accepted. Reportedly, in a separate settlement, Tesla itself must also pay an additional $20 million fine for failing to censor Musk’s tweet.
Interestingly, a clause is entered into the agreement that states Musk must follow any communication procedures implemented by Tesla, specifically related to posts on Twitter. This may lead to an intriguing development where, should the board require it, Musk must seek approval before posting Tesla-related information on Twitter.
Last Thursday, Musk reportedly redacted his acceptance of the settlement at the last minute, forcing the SEC’s hand to file suit against the CEO over his tweet stating that he had secured funding to take Tesla private at $420 per share. Under the no-guilt agreement, Musk does not admit to fault, but must also not publicly issue a statement denying fault under the premise of factual basis.
“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight to protect investors,” Stephanie Avakian, co-director of the SEC’s Enforcement Division, said in a statement to the Washington Post.
Tesla and the SEC did not respond to The Drive’s request for comment on this matter.