Tech giant Elon Musk is resigning as Tesla’s chairman but will remain as CEO after he settled charges with the Securities and Exchange Commission, according to documents.
Musk will have to pay a civil penalty of $20 million after he made a series of “false and misleading” tweets about potentially taking his car company private, according to the SEC. Tesla will also have to pay an additional $20 million. Though stepping down as chairman, Musk will remain on the board.
In its court filings earlier this month, the SEC argued that Musk was attempting to impress his girlfriend, the singer Grimes, when he tweeted to his more than 20 million followers he might take Tesla private at $420 per share.
“While leading Tesla’s investors to believe he had a firm offer in hand, we allege that Musk had arrived at the price of $420 by assuming 20 percent premium over Tesla’s then existing share price then rounding up to $420 because of the significance of that number in marijuana culture and his belief that his girlfriend would be amused by it,” Steven Peikin, co-director of the SEC’s enforcement division, said in a press conference earlier this week.
The stunt has also prompted a criminal investigation into Musk by the Justice Department.
The settlement was reached without an admittance or denial of the SEC’s allegation, according to the commission.
Musk will have to resign in the next 45 days and won’t be able to join the board as chairman for three years after his resignation, according to the settlement.
The settlement also includes the addition of two independent directors to the Tesla board, and the other governance enhancements.
SEC chairman Jay Clayton hailed the “prompt resolution of the matter,” and said in a statement that the settlement is in the “best interests of our markets and our investors, including the shareholders of Tesla.”
Clayton said that quick action by the SEC underscored the importance of reliable information from corporate officers. “When companies and corporate insiders make statements, they must act responsibly, including endeavoring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision,” he said in the statement.
Musk is also currently being sued by a British cave diver who helped save a trapped Thai soccer team earlier this year. Musk inexplicably referred to the man as a “child rapist” and “pedo guy.” The tech genius was finally sued by diver Vernon Unsworth after he tweeted in August that he found it “strange” that Unsworth hadn’t sued him yet.
“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in an emailed statement to Bloomberg earlier this week. “I have 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.”
This story was updated with a statement from SEC Chairman Jay Clayton.