Elon Musk will pay a hefty fine and stand down as Tesla chairman for three years, after a US Securities and Exchange Commission (SEC) investigation into his tweets about taking Tesla private.
Musk will remain CEO of the the company, but has to stand down as chairman of the board. He and Tesla will also each have to pay a US$20 million ($27,600,000) fine, after agreeing to a deal with the SEC overnight.
In August this year, Musk tweeted he was "considering taking Tesla private" and the company had "funding secured" at US$420 ($580) per share. The SEC said the tweets were "false and misleading" because Musk hadn't "discussed, much less confirmed, key deal terms".
The SEC made a point of holding Elon Musk responsible for his impact on the market, which suffered "significant" disruption after the tweets went live.
“Corporate officers hold positions of trust in our markets and have important responsibilities to shareholders,” said Steven Peikin, co-director of the SEC Enforcement Division.
“An officer’s celebrity status or reputation as a technological innovator does not give license to take those responsibilities lightly.”
Speaking with CNBC before the settlement, Elon Musk said the "unjustified action by the SEC leaves me deeply saddened and disappointed", arguing he has "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 continued.
Despite his strident denial, Tesla shares dropped 14 per cent after the SEC filed its lawsuit on Friday.