Musk settles SEC suit, will pay fines and step down as chairman

Musk will get to keep his CEO seat.

Tesla founder and CEO Elon Musk has settled charges in a Security and Exchanges Commission lawsuit against him. The SEC filed the suit against Musk earlier this week, over statements made on Twitter claiming he had "secured" funds to take his company private.

The terms say Musk will have to resign as chairman of the board and cannot reclaim his seat for three years. Musk will be able to stay on as CEO, though. Musk will also have to pay a $20 million fine as a civil penalty.

In addition, Tesla will also have to pay a $20 million fine, and according to CNBC, it is "expected to appoint two new independent directors to the board."

The SEC accused Musk of making "false and misleading" statements in his August 7 tweet, which said "Am considering taking Tesla private at $420. Funding secured." The regulatory agency alleges that Musk violated protocol and did not in fact have the funds fully vetted at the time of his tweet.

At the time, Tesla stock was trading for much lower, prompting a run on the stock. NASDAQ was forced to freeze trading on Tesla stock.

The settlement is pending court approval.