Tesla's Elon Musk hires Mark Cuban's former attorney after rejecting SEC settlement

Embattled Tesla founder Elon Musk rejected a settlement offer from the U.S. Securities and Exchange Commission that would have allowed him to remain CEO of the electric car-maker.

Musk, who is being sued for an allegedly false claim last August that he had “funding secured” to take Tesla private, is said to have rejected the offer because he wants to end the case with a clean record. He would have had to pay a fine and agree to certain stipulations in order to remain as CEO.

Tesla shares fell more than 10 percent in trading Friday.

Ticker Security Last Change Change %
TSLA TESLA INC. 250.22 +3.84 +1.56%

The Tesla executive has tapped Chris Clark, a former U.S. attorney who successful defended Mark Cuban from insider trading charges, to serve on his legal team, FOX Business senior correspondent Charlie Gasparino reported. The decision to hire Clark is said to have played a key role in Musk’s decision to reject the settlement offer, which would have required an admission of wrongdoing.

The SEC is attempting to bar Musk from serving as the CEO of any publicly traded company. The enforcement agency accused him of making “false and misleading” statements about his apparent bid to take the company private at $420 per share, well above Tesla’s stock price at the time of his Aug. 7 tweet.

The tweet created extreme volatility for Tesla shares, which have lost over 20 percent during the third-quarter, which ends Friday.

"Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders," Steven Peikin, co-director of the SEC's Enforcement Division, said in a statement. "An officer's celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly."

Tesla did not immediately respond a request for comment on Musk’s apparent rejection of a settlement. However, Musk denied any wrongdoing in a statement issued by the company on Thursday.

"I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way," Musk said.

The Associated Press contributed to this report.