Elon Musk has agreed to pay a fine of $20 million and will step down as chairman of Tesla as part of a deal with the US Securities and Exchange Commission (SEC) after he was sued for securities fraud after tweeting that he had "funding secured" to take Tesla private. The SEC's complaint alleged that Musk had made "false and misleading" statements, with Tesla's share price having risen on the back of Musk's tweet.
Musk will stay on as company CEO but will relinquish his role as company chair for at least three years as part of the agreement, which is still subject to court approval. 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.
"The $40 million in penalties will be distributed to harmed investors under a court-approved process," the SEC said.
According to the agreement filed on Saturday, Musk must resign as chair within 45 days. Tesla is due to appoint two new independent directors, with the board expected to oversee Musk's communications with investors. "The resolution is intended to prevent further market disruption and harm to Tesla's shareholders," said SEC enforcement division co-director Steven Peikin.
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