The Securities and Exchange Commission announced Saturday September 30 that Elon Musk CEO and chairman of Tesla and the green car company have agreed to pay a total of 40 million in fines and for Musk to resign as chairman to settle securities fraud charges In a press release the SEC said it charged Tesla with failing to have required disclosure controls and procedures relating to Musks Tesla going private tweets and Tesla stocks a charge that Tesla has agreed to settle The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Teslas corporate governance and oversight in order to protect investors said Stephanie Avakian co-director of the SECs Enforcement Division in the press release According to the SECs complaint against Musk his August 7 2018 tweet that he could take Tesla private at 420 per share and his comments that funding for the transaction had been secure and that the only remaining uncertainty was a shareholder vote was not truthful The SEC determined Musk had known the deal was uncertain and subject to several contingencies Whats more the SEC found Musk had not discussed specific deal terms including price with any potential investors According to the SECs complaint Musks misleading tweets caused Teslas stock price to jump by over six percent on August 7 and led to significant market disruption The SEC also slammed Tesla for having no disclosure controls or procedures in place to determine whether Musks tweets contained information required to be disclosed in Teslas SEC filings Whats more the SEC said it didnt have sufficient processes in place to ensure that Musks tweets were accurate or complete As part of the settlement Musk cant be re-elected chairman for three years Tesla has to appoint two new independent directors to the board and Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musks communications Musk and Tesla are each paying 20 million penalties with the 40 million being distributed to harmed investors As a result of the settlement Elon Musk will no longer be chairman of Tesla Teslas board will adopt important reforms including an obligation to oversee Musks communications with investors and both will pay financial penalties added Steven Peikin co-director of the SECs Enforcement Division The resolution is intended to prevent further market disruption and harm to Teslas shareholders YOU MIGHT ALSO LIKE Related Items Elon Musk go private News SEC Tesla twitter Whats Hot