Under the deal, Musk will relinquish his role as Tesla’s chairman for three years and pay a $20 million fine. Tesla also agreed to pay $20 million. The company was not charged as part of the lawsuit, which had sought to prohibit Musk from serving as CEO of a public company.
The SEC alleged last month that Musk misled investors with his Aug. 7 tweet that funding had been “secured” to take Tesla private at $420 a share, which sent shares skyrocketing and short-sellers facing massive losses. Musk later scrapped the proposal, saying investors believed that Tesla would be “better off as a public company.”
The settlement also requires that Tesla name an independent chairman, two independent directors and a board committee to monitor the company’s disclosures.
Earlier this month, Musk appeared to jab the SEC while the settlement was still under review in federal court, referring to the agency as the “Shortseller Enrichment Commission” in a tweet on Oct. 4.
Shares of Tesla rose more than 4 percent in recent trading.