Elon Musk is set to step down as the chairman of Tesla, an electric car-making company, after reconciling a fraud lawsuit with regulators in the United States over the tweets that he made about taking the company private.
The billionaire has also agreed to pay a fine of $20m (£15m) from the US securities and exchange commission (SEC) to stave off a legal threat which could have entirely forced him out of the firm.
Tesla will also be paying a fine of $20m to the SEC.
While Musk will be staying on as the chief executive of Tesla, he has agreed to step down from his role as chairman for at least three years.
The news emerged late last night. It comes several days after the SEC filed charges against Musk. It accused the maverick engineer of making misleading and false statements through his Twitter account.
Last August, Musk posted a tweet that he was considering the possibility of taking Tesla back into private ownership. He also said that he already had “funding secured” and was close to a $70 billion buyout which would value Tesla at $420 per share.
After his announcement, the shares in the company rose briefly, however, it later dropped again. Amid the heightening pressure on Musk towards the end of the previous week, the share price of Tesla had declined by 14 percent by Friday.
Jay Clayton, the SEC chairman, said that the agreement was in the best interest of markets and investors, including the shareholders of Tesla.
Clayton stated: “This matter reaffirms an important principle embodied in our disclosure-based federal securities laws…Specifically, when companies and corporate insiders make statements, they must act responsibly, including endeavouring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision.”
The sudden rise of Musk to prominence has largely been dominated by investors who bought into the ambitious promises of Musk on electric car production targets.
However, in the last few months, the shareholders have been shaken amid a series of controversial actions that were made by Musk. It included his decision to smoke weed while on a podcast and make apparently false claims about a British cave diver who he called a “pedophile”.