— Tesla CEO and Chairman of the Board Elon Musk has agreed to settle charges from the Securities and Exchange Commission that will see Musk step down as chairman while $40 million in penalties will be paid for securities fraud.
The settlements block Musk from re-applying for his chairman role for at least three years, and the $40 million in penalties will be split, $20 million to be paid by Tesla and the other $20 million paid by Musk.
He was charged by the government after publicly claiming he could take his company private at $420 per share, what the SEC describes as a "substantial premium to its trading price at the time."
In addition, Mr. Musk released a statement claiming he had funding secured for going private and just needed a vote by shareholders. According to federal securities investigators, Musk never provided any evidence to support his claims because his statements "lacked an adequate basis in fact."
Finding his statements misleading, his words were enough to cause Tesla's stock price to jump by more than 6 percent on August 7, 2018, causing what the feds call a "significant market disruption."
The SEC further says Tesla had no disclosure controls or procedures in place to prevent harmful incidents that led to the federal charges.
Although Musk is out as chairman and replaced by an independent chairman, his role of CEO will continue as a new committee of independent directors will be put in place to keep an eye on things.
The SEC settlements are still subject to court approval.
