Elon Musk will give up the role of Tesla Inc. chairman and pay a $20 million penalty to settle fraud charges brought by the U.S. over his claims about taking the company private.
Musk will get to keep his job as chief executive officer and remain on the company’s board, but must resign as chairman within 45 days and can’t be re-elected to the role for three years as part of the accord reached Sept. 29 with the Securities and Exchange Commission. Tesla also will pay a $20 million fine.
Neither Tesla nor Musk admitted wrongdoing under the settlement, which was reached two days after the regulator sued the billionaire over his tweeted claims to have had the funding and investor support to buy out stockholders at $420 a share.
The deal eases uncertainty over Tesla’s future while removing Musk from a key role at the automaker he’s led to become one of the most valuable in the world. The SEC’s lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors. Tesla shares plummeted 14% Sept. 28, the biggest drop in almost five years.
“This is a good resolution for Tesla stakeholders,” Ben Kallo, an analyst at Robert W. Baird & Co. with the equivalent of a buy rating on the shares, said in an e-mail. “I expect the stock to trade materially higher on this and into the quarter where we can focus on the fundamentals.”