Elon Musk Resigns as Chairman; Order to Pay $20 Million Fine

Elon Musk to Resign as Chair of Tesla Board but Remain CEO

Elon Musk to Resign as Chair of Tesla Board but Remain CEO

The news of Tesla CEO Elon Musk settling with USA financial regulators sent the company's stock soaring Monday morning.

The rise pretty much makes up for the losses suffered Friday, after the Securities and Exchange Commission (SEC) officially sued Musk over his tweet about having secured funding for a plan to take Tesla private.

The settlement will require the billionaire to relinquish his role as chairman for at least three years, but he will able to remain as chief executive. Tesla itself has also been slapped with a $20 million fine by the SEC, making Musk's tweet one of the most expensive in history. Tesla is due to appoint two new independent directors, with the board expected to oversee Musk's communications with investors.

In any case, the $40 million, which will be distributed to harmed shareholders after a court-approved process, are but a very small fraction of the more than $7 billion lost due to the whole debacle.

Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.

The agreement eases pressure on Tesla's embattled CEO, who faced potentially being barred from serving as an officer or board member of a publicly traded company as a result of the charges, which stemmed from a tweet by Musk about taking the company private.

He accepted the deal with the SEC "without admitting or denying the allegations of the complaint", according to a court document.

Tesla is seeking to ramp up production of its Model 3, the mass-market vehicle seen as a key to the automaker's future.

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