Elon Musk removed as Tesla chairman, but will remain CEO in US$40 million settlement after tweet

Musk to split a US$40 million penalty with the electric-car maker to settle fraud charges over his tweeted claims about taking the company private and must resign as chairman within 45 days

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Tesla Chief Executive Elon Musk will relinquish the role of Tesla chairman and split a US$40 million penalty with the electric-car maker to settle fraud charges brought by the US over his tweeted claims about taking the company private. Photo: Reuters

Published: 6:45am, 30 Sep 2018Updated: 9:26pm, 30 Sep 2018

Elon Musk has reached a deal over fraud charges that will see him step down as electric automaker Tesla’s chairman of the board for at least three years and pay a US$20 million fine.

But he will stay on as CEO.

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.

“The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla - including Musk’s removal as chairman of the Tesla board -and the payment by Musk and Tesla of financial penalties” of US$20 million each, the Securities and Exchange Commission said in a statement Saturday.

US Securities and Exchange Commission Co-Director of Enforcement Steven Peiken announces the decision to sue Tesla chief executive Elon Musk. Photo: AFP

The SEC had charged Musk with securities fraud, alleging that he misled investors when he tweeted on August 7 that he had “funding secured” to privatise the electric automaker at US$420 a share.