Sept. 29 (UPI) -- Elon Musk agreed Saturday to step down as chairman of Tesla's board of directors to settle a lawsuit by the U.S. Securities and Exchange Commission accusing him of misleading investors.
The Canadian businessman must pay a $20 million fine in addition to the $20 million the company was fined. Musk will retain his role as CEO of the company, but Tesla must add two independent directors to its board.
Musk, who must resign the board within 45 days, will be barred from rejoining for three years. Musk and Tesla agreed to settle the lawsuit without admitting any wrongdoing.
The SEC sued Musk on Thursday after tweeting in August that he had secured funding to take the automaker private, causing Tesla's shares to rise. The government said Musk fabricated the tweet because he hadn't actually discussed or confirm key terms of the deal, such as the price, with any potential funding source.
"Musk made his false and misleading public statements about taking Tesla private using his mobile phone in the middle of the active trading day," the complaint stated. "He did not discuss the content of the statements with anyone else prior to publishing them to his over 22 million Twitter followers and anyone else with access to the Internet. He also did not inform Nasdaq that he intended to make this public announcement, as Nasdaq rules required."
On Thursday, Musk denied the allegations, which he called "unjustified."
"This unjustified action by the SEC leaves me deeply saddened and disappointed," he said. "I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way."
Musk tweeted about taking the company private on Aug. 7 shortly before trading for Tesla share's stopped at about 2 p.m. EDT at $367 a share.
"Am considering taking Tesla private at $420. Funding secured," he wrote. "Shareholders could either to sell at 420 or hold shares and go private."
Stocks jumped more than 10 percent after the announcement, but on Aug. 25., Musk announced he had decided not to take Tesla private, citing the will of his investors.
Musk added that time and money also motivated the decision, which he reached after meeting with Tesla's board of directors.
Daniel Uria contributed to this report.