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Elon Musk and Tesla settle fraud charges with SEC, to pay $40M fine

Regulators also put a muzzle on the CEO's Twitter account
Elon Musk Twitter profile
The mercurial CEO has been under pressure after a series of controversial tweets

Embattled Tesla Inc (NASDAQ:TSLA) CEO Elon Musk has settled charges brought by the Securities and Exchange Commission stemming from a tweet last month claiming to have the funding to take the electric-car maker private.

According to the SEC, Musk has agreed to step down as chairman and pay a $20 million fine. The company will also pay $20 million.

Among the conditions of the settlement, the company must put controls in place to oversee all of Musk's communications with investors.

READ: Tesla faces criminal probe by US over Elon Musk's statements on aborted go-private plan

Musk will remain in his role as CEO. He neither admits nor denies the allegations as part of the settlement. He will be ineligible for re-election as board chairman for three years.

The deal is subject to court approval, the SEC said.

Tesla shares jumped 16% to $307 in premarket trading.

READ: SEC Settlement

In August, Musk tweeted that he was considering taking the company private at $420 per share and that he had "funding secured." The tweet sent Tesla shares on a wild ride.

Musk still faces a probe by federal prosecutors over the tweet.

Tela shares closed 13.9% lower to $264.77 Friday.

--Updates share price, adds Twitter oversight--

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