Under a settlement reached this weekend, Tesla and Musk will pay $20 million each to the securities regulator and Musk will step down as chairman but remain as chief executive. Tesla will also be required to appoint two additional board members who are independent of Elon Musk.
The SEC said it wanted to bar Musk from serving as an officer or director of a publicly traded company, a scary option for investors who felt Musk was almost synonymous with Tesla and that another executive would have trouble managing Tesla's manufacturing challenges and keeping the public satisfied in spite of Tesla's substantial debts.
The SEC wrote in its complaint that Musk's August 7 statements "created the misleading impression that certain terms of a transaction to take Tesla private had been determined when, in fact, they had not even been explored, and in some cases, proved to be impossible".
Lawyers say the settlement and size of the fine may give more ammunition to short-sellers pursuing separate cases against Musk for manipulating the company's shares as well as to a probe by the Justice Department. It was a bit flippant, and a notification of both items back-to-back - news of the settlement, plus Elon's tweet - leaves you with the impression Elon remains as unconcerned with The Man as ever.
The Commission said Musk sent the tweet even though he "allegedly knew that the potential transaction was uncertain and subject to numerous contingencies", causing "significant market disruption".
Bluff called, Musk settled and agreed to resign for at least 3 years and will pay a collective $40m fine between himself and Tesla. The SEC also said that Tesla had not put any procedures in place to determine that Musk's tweets about the company were accurate or complete. "Funding secured." Later on, the SEC ruled that Musk never went through with his declaration and deal between the company and the Saudi sovereign wealth fund set to foot the bill on the buyout.
Tesla is expected to release third-quarter production this week, and investors are watching to see if it hit targets for the Model 3, a high-volume vehicle.
Elon Musk, however, is found shrugging off all the allegations made against him.