Musk to step down as Tesla chairman, remain as CEO in SEC settlement

Tesla Model 3

Tesla Inc and Elon Musk have accepted to pay $20 million each to financial regulators and the billionaire are going to step down as the company’s chairman but remain as chief executive, under a settlement that caps two months for the automaker.

The securities fraud agreement, revealed by the U.S. Securities and Exchange Commission on Saturday, is going to come as a relief to investors, who had stressed that a huge legal fight would only further hurt the loss-making electric auto company.

The SEC on Thursday charged Musk, 47, with misleading investors with tweets on August 7 that stated he was thinking about taking Tesla private at $420 per share and had secured funding. The tweets had lacked any basis in fact, and the ensuring market chaos hurt investors, it stated.

Investors and corporate governance experts stated the agreement could strengthen Tesla, which has been bruised by Musk’s recent behavior, which consisted smoking marijuana and wielding a sword on a webcast, and attacking a British rescue diver through Twitter.

The settlement should place more surveillance on Musk while not taking the “devastating” measure of forcing him out, stated Steven Heim, a director at Boston Common Asset Management, that has shares in Tesla battery maker Panasonic.

Tesla should appoint an independent chairman, two independent directors, and a board committee to put controls over Musk’s communications under the proposed agreement.

“The prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, consisting the shareholders of Tesla,” stated SEC Chairman Jay Clayton.

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