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Elon Musk, the Chief Executive Officer of Tesla. motors, coming under pressure from his attorneys and investors of the company has agreed to step down as chairman and pay a $20 million fine in a deal with the United States stock market regulatory authority, Securities and Exchange Commission (SEC), to settle securities fraud charges.
The SEC announced the deal on Saturday - two days after it sued Musk in federal court for misleading investors over his post on Twitter earlier this month that he was considering taking Tesla into private ownership.
Musk said that he had "funding secured" for a buyout of the electric-car company at $420 a share, reports The New York Times.
Musk will be allowed to remain as CEO but must leave his role as chairman of the board within 45 days, under the settlement, which requires court approval.
According to court filings, he cannot seek re-election for three years.
He accepted the deal with the SEC "without admitting or denying the allegations of the complaint", according to a court document.
"As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla's board will adopt important reforms - including an obligation to oversee Musk's communications with investors - and both will pay financial penalties," Steven Peikin, Co-Director of the SEC's Enforcement Division, said in a statement.
"The resolution is intended to prevent further market disruption and harm to Tesla's shareholders," Peikin added.
Musk's tweet overtaking his company private, along with attacks on critics on social media, raised concerns with investors regarding whether Musk has become too focused on criticism from alleged short-sellers who had been making bets against him and Tesla.
According to the SEC's complaint, Musk's misleading tweets caused Tesla's stock price to jump by over six percent on August 7 and led to significant market disruption.
In recent years, Tesla has become one of the most valuable American carmaker, with its stock worth over $50 billion.
Though, its shares have been hit hard since the SEC filed the case. On Friday, its stock dropped about 14 percent.
Musk, a co-founder of Tesla, is the company's largest stockholder, owning nearly 22 percent of its outstanding shares.
In recent times, Musk has courted several controversies by making a series of out-of-the-way public comments or appearances, including an Internet interview in which he appeared to smoke marijuana.
By Sowmya Sangam