The Securities and Exchange Commission reached a settlement of fraud charges on Saturday with Tesla Inc. and Elon Musk that forces Musk’s removal as chairman of the Tesla board and the payment of $40 million in penalties.

Musk will pay $20 million of the penalty personally, without using insurance or other assistance, and will be ineligible to be re-elected chairman for three years. Tesla will pay the other $20 million and must name two new independent directors, one of which can be the new chair.

The SEC filed a complaint against Musk on Thursday afternoon that alleged when he tweeted on Aug. 7 that he would consider taking Tesla TSLA, +0.75% private at $420 per share — a substantial premium to its trading price at the time — Musk knew that the potential transaction was uncertain and subject to numerous contingencies. Instead, Musk proclaimed that funding for the transaction was “secured,” and that the only remaining uncertainty was a shareholder vote.

According to the SEC, Musk had not discussed specific deal terms, including price, with any potential financing partners, and his statements about the prospective transaction lacked an adequate basis in fact. Musk’s misleading tweets caused Tesla’s stock price to jump by more than 6% on Aug. 7, and led to significant market disruption, including hundreds of pages of complaints filed with the SEC, according to reporting by The Outline, whose reporters said they had obtained 147 pages of complaints about Musk from investors in Tesla.

See: Tesla investors complained to the SEC — and here’s what they said

Read also: Why legal experts say the SEC has a strong case against Musk

The SEC also charged Tesla on Saturday with failing to have in place the required disclosure controls and procedures relating to Musk’s tweets, a charge that Tesla also has agreed to settle and which will result in comprehensive corporate-governance modifications and other reforms at Tesla. In addition to Musk’s removal as chairman of the Tesla board, to be replaced by an independent chairman, Tesla will also be required to appoint two new independent directors to its board. If one of the new directors is also chairman, it could be only two new board members total.

The chairman of the SEC, Jay Clayton, took the unusual step of putting out his own statement after the settlement was announced Saturday, saying it is “in the best interests of our markets and our investors.” He stressed that the agency seeks to punish bad actions as a deterrence while not punishing investors for the sins of an executive.

“It often is the case that the interests of ordinary shareholders — who had no involvement in the misconduct — are intertwined with the interests of offending officials and the company,” Clayton wrote, specifically bringing up cases in which the “skills and support of certain individuals may be important to the future success of a company.”

At the SEC, Clayton said, “the interests of ordinary investors are at the front of our minds and, in matters involving misconduct, we seek to serve those interests to the extent practicable while also ensuring that we remediate and deter misconduct.”

Musk was expected to remain a member of the board of directors under terms of the settlement, which are subject to court approval. A Tesla spokeswoman did not immediately respond to a request for comment late Saturday.

Musk and Tesla agreed to settle the charges against them without admitting to nor denying the SEC’s allegations.

Joshua Mitts, an associate professor at Columbia Law School, told MarketWatch that the Saturday settlement was a “win-win.”

“The SEC,” he said, “achieves its goal of punishing and deterring securities fraud. Elon is only required to step down as chairman of Tesla’s board. And, most importantly, Tesla’s shareholders are better off [with] the appointment of two independent directors and the new committee of independent directors. That is really a key step, which shows the SEC is putting shareholders first.”</s>Tech giant Elon Musk is resigning as Tesla’s chairman but will remain as CEO after he settled charges with the Securities and Exchange Commission, according to documents.

Musk will have to pay a civil penalty of $20 million after he made a series of “false and misleading” tweets about potentially taking his car company private, according to the SEC. Tesla will also have to pay an additional $20 million. Though stepping down as chairman, Musk will remain on the board.

Elon Musk will resign as chairman of the board of Tesla pic.twitter.com/GjB6AkwADu — Eriq Gardner (@eriqgardner) September 29, 2018

In its court filings earlier this month, the SEC argued that Musk was attempting to impress his girlfriend, the singer Grimes, when he tweeted to his more than 20 million followers he might take Tesla private at $420 per share.

“While leading Tesla’s investors to believe he had a firm offer in hand, we allege that Musk had arrived at the price of $420 by assuming 20 percent premium over Tesla’s then existing share price then rounding up to $420 because of the significance of that number in marijuana culture and his belief that his girlfriend would be amused by it,” Steven Peikin, co-director of the SEC’s enforcement division, said in a press conference earlier this week.

The stunt has also prompted a criminal investigation into Musk by the Justice Department.

The settlement was reached without an admittance or denial of the SEC’s allegation, according to the commission.

Musk will have to resign in the next 45 days and won’t be able to join the board as chairman for three years after his resignation, according to the settlement.

The settlement also includes the addition of two independent directors to the Tesla board, and the other governance enhancements.

SEC chairman Jay Clayton hailed the “prompt resolution of the matter,” and said in a statement that the settlement is in the “best interests of our markets and our investors, including the shareholders of Tesla.”

Clayton said that quick action by the SEC underscored the importance of reliable information from corporate officers. “When companies and corporate insiders make statements, they must act responsibly, including endeavoring 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,” he said in the statement.

Musk is also currently being sued by a British cave diver who helped save a trapped Thai soccer team earlier this year. Musk inexplicably referred to the man as a “child rapist” and “pedo guy.” The tech genius was finally sued by diver Vernon Unsworth after he tweeted in August that he found it “strange” that Unsworth hadn’t sued him yet.

“This unjustified action by the SEC leaves me deeply saddened and disappointed,” Musk said in an emailed statement to Bloomberg earlier this week. “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.”

This story was updated with a statement from SEC Chairman Jay Clayton.</s>WASHINGTON/SAN FRANCISCO (Reuters) – Tesla Inc and Elon Musk have agreed to pay $20 million each to financial regulators and the billionaire will step down as the company’s chairman but remain as chief executive, under a settlement that caps a tumultuous two months for the carmaker.

The securities fraud agreement, disclosed by the U.S. Securities and Exchange Commission yesterday, will come as a relief to investors, who had worried that a lengthy legal fight would only further hurt the loss-making electric car company.

The SEC on Thursday charged Musk, 47, with misleading investors with tweets on Aug. 7 that said he was considering taking Tesla private at $420 a share and had secured funding. The tweets had no basis in fact, and the ensuring market chaos hurt investors, it claimed.

Investors and corporate governance experts said the agreement could strengthen Tesla, which has been bruised by Musk’s recent behavior, which included smoking marijuana and wielding a sword on a webcast, and attacking a British rescue diver via Twitter.

The settlement should place more oversight on Musk while not taking the “devastating” measure of forcing him out, said Steven Heim, a director at Boston Common Asset Management, which owns shares in Tesla battery maker Panasonic Corp.

Tesla must appoint an independent chairman, two independent directors, and a board committee to set controls over Musk’s communications under the proposed agreement.

“The prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla,” SEC Chairman Jay Clayton said in a statement.

Thursday’s charges shaved about $7 billion off high-flying Tesla, knocking its market value to $45.2 billion on Friday, below General Motors Co’s $47.5 billion.

In the settlement, the agency pulled back from its demand that Musk, who is synonymous with the Tesla brand, be barred from running Tesla, a sanction that many investors said would be disastrous.

“I think this is the best possible outcome for everyone involved” said Ivan Feinseth of Tigress Financial Partners, who rates Tesla “neutral” and who called the SEC’s penalty “a slap on the wrist” for Musk.

“The fact that he can remain CEO is very important for the company.”

Neither Musk nor Tesla admitted or denied the SEC’s findings as part of the settlement, which still must be approved by a court. Tesla and Musk did not immediately respond to requests for comment.

Musk had been directly involved in almost every detail of Tesla’s product design and technology strategy, and drove the company’s employees to extraordinary achievements – much as another Silicon Valley chief executive, Steve Jobs, did at Apple Inc.

The entrepreneur is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three years.

The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk’s tweets. The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

Musk walked away at the last minute from an earlier settlement with the SEC that would have required him to give up key leadership roles at the company for two years and pay a nominal fine, according to media reports on Friday. Reuters on Friday reported that Musk could settle with the SEC but was ready for a court fight.

Investors said on Friday that it has been a mistake for Musk to turn down that settlement, especially at a time when the company has been pushing hard to meet aggressive production targets for its Model 3 sedan.

The settlement tasks the Tesla board, which critics have accused of failing to rein in Musk, with the tricky challenge of finding an independent chairman able to work closely with the sometimes unpredictable chief executive.

It was not immediately clear who would be appointed to the role. Antonio Gracias, the current lead independent director and CEO of Valor Equity Partners, has been criticized as being too close to Musk and his companies.

“The question is whether Musk’s buddies on the board decide to bring in a really strong chair who will stand up to Musk,” said Erik Gordon, a University of Michigan business professor who follows corporate governance.

Musk has driven the company to the verge of profitability with a costly ramp-up of production of its Model 3 over the past year. Electric vehicle news site Electrek reported that Tesla had produced 51,000 Model 3s with a couple of days left in the quarter, hitting its goal of 50,000 to 55,000.

The CEO, who has often turned to Twitter to promote Tesla and confront critics, said on Thursday that the SEC’s actions were unjustified. Tesla shares jumped after his Aug. 7 tweets, a blow to short-sellers betting on the stock’s decline.

As the public face of Tesla, Musk had gained legions of fans for his bold approach to business and technology. He used his Twitter account to promote the achievements of Tesla, his rocket launch company SpaceX, and other projects such as his tunnel venture, the Boring Co, to his nearly 23 million followers.</s>The U.S. Securities and Exchange Commission said on Saturday it had reached a settlement with car-maker Tesla and Chief Executive Elon Musk over his Aug. 7 tweets about taking the company private.

WASHINGTON: The U.S. Securities and Exchange Commission said on Saturday that car-maker Tesla and Chief Executive Elon Musk had agreed to pay US$20 million each under a settlement that will also see the billionaire step down as chairman after a tumultuous two months for the company.

But Musk, who is synonymous with the Tesla brand, will remain as chief executive under the settlement over tweets he posted on Aug. 7 about taking the company private, the SEC said.

The SEC alleged in a lawsuit on Thursday that the tweets about financing for a go-private plan he abandoned just weeks later had no basis in fact, and said the market chaos that ensued hurt investors.

Musk is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three years. Tesla is required to appoint two new independent directors to its board.

Saturday's settlement saw the SEC pull back from its demand that Musk be barred from running Tesla, a sanction that many investors said would be disastrous for the loss-making electric carmaker.

The SEC charged Tesla with failing to have required disclosure controls and procedures for Musk's tweets. The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information.

Neither Musk nor Tesla admitted or denied the SEC's findings as part of the settlement. Tesla did not immediately respond to a request for comment and Musk could not immediately be reached for comment.</s>Tesla's battle with the Securities and Exchange Commission could be the company's biggest crisis in almost a decade. And it all started with a tweet.

"Am considering taking Tesla private at $420," Musk wrote on August 7. "Funding secured."

Tesla shares soared. But it quickly became apparent that Musk didn't actually have a commitment from anyone to fund a buyout—at least not in writing. That caught the SEC's attention. The SEC quickly began investigating Musk's tweets for possible violation of securities laws, which prohibit manipulating markets by publishing inaccurate information.

On Thursday, after Musk rejected a proposed settlement, the agency sued Musk, seeking fines, an injunction against future misbehavior, and an order barring Musk from being an officer or director of Tesla. Tesla stock plunged more than 10 percent in after-hours trading on Thursday, and it closed down almost 14 percent on Friday.

Tesla and Elon Musk have faced plenty of lawsuits in the past. But this one is different, both because the federal government is a formidable adversary, and because there's a real chance it could cost Musk his job.

The lawsuit puts into sharp relief a question that has been looming over Tesla in recent months: is Musk still the best choice to lead Tesla?

No one can deny that Musk is a brilliant entrepreneur with an unrivaled ability to create and nurture innovative startups. But managing a big public company requires different skills and a different personality.

Elon Musk is impulsive, he micromanages subordinates, and he hates to admit when he makes a mistake. All of these are bad traits for the CEO of a big publicly-traded company, as the "funding secured" debacle vividly illustrations. And they are going to become bigger and bigger liabilities as Tesla grows.

In a New York Times interview last month, Elon Musk called 2018 "the most difficult and painful year of my career." Some of Musk's challenges this year—like the need to scale up Model 3 production—were unavoidable. But Musk's own actions have made things worse.

An important skill for the leader of any large organization is knowing when to de-escalate conflicts—settle a lawsuit, issue an apology, let critics have the last word.

Musk is terrible at this. For example, this summer Musk got into a spat with Vern Unsworth, a British cave explorer who criticized the "submarine" Musk built to try to help kids trapped in a cave in Thailand. (It wasn't ultimately used). Musk inexplicably decided to escalate the situation by labeling Unsworth a "pedo guy" without a shred of evidence. Over the next few weeks, he escalated further by essentially daring Unsworth to sue him for defamation. He then made more defamatory claims about Unsworth in an email to a BuzzFeed reporter—until Unsworth ultimately filed a lawsuit.

This kind of scenario has played out repeatedly over the years. In March, a Tesla customer named Walter Huang died in a Model X while Autopilot was engaged. Tesla's response was to blame Huang for the crash, starting a high-profile public feud with Huang's widow.

In May, he berated a Wall Street analyst in a conference call for asking "boring, bonehead questions." In July, Musk launched a Twitter tirade against Business Insider reporter Linette Lopez that columnist Felix Salmon called "obsessive and deranged to the point at which it should worry every shareholder of any company where he serves as CEO."

Musk's refusal to back down has its most serious consequences when he deals with regulators. In April, Musk reportedly hung up on the chairman of the National Transportation Safety Board (NTSB), which has been investigating the Huang crash. The two were arguing because the NTSB had asked Musk to stop making public statements about the Huang crash during the investigation—a request Musk refused to honor. The NTSB ultimately froze Musk out of the investigation, depriving Tesla of an opportunity to convince the NTSB that its technology was not at fault.

And this week, the same attitude led Musk to refuse a proposed settlement with the SEC. According to CNBC, Musk would have had to pay a nominal fine but would not have had to admit guilt. He would also have needed to give up his position as chairman of Tesla's board and name two additional independent directors.

CNBC reports that Musk "felt that by settling he would not be truthful to himself." Presumably this attitude also explains his confrontational stance in other recent disputes. But this doesn't seem like a great attitude to have when you run a big public company. Sometimes, a CEO needs to recognize that his own ego is less important than the success of his company—and the welfare of its many shareholders, employees, and customers.

A vivid story in The Wall Street Journal last month had Musk demanding to know why an assembly line stopped when someone stepped in front of a car. When he was told it was a safety measure, the Journal reports, "the billionaire entrepreneur began head-butting the front end of a car on the assembly line."

"I don't see how this could hurt me," Musk reportedly said. "I want the cars to just keep moving."

Musk's abrasive management style and his refusal to listen to subordinates' concerns has likely contributed to high turnover among senior Tesla managers. Tesla has suffered the departure of three consecutive heads of its Autopilot division in less than two years. The Journal has reported that the first of those departures, Sterling Anderson, left because he disagreed with Musk's decision to market the hardware in Tesla's cars as being capable of "full self-driving."

Tesla has also lost a series of finance executives. Earlier this month, Chief Accounting Officer Dave Morton quit after less than a month on the job. Morton joined the company right around the time of Musk's "funding secured" tweet. And according to CNBC, he "quit the company after concluding CEO Elon Musk wasn't interested in accounting details around a potential take-private transaction."</s>Tesla CEO Elon Musk will step down as chairman of the electric automaker and pay a $20 million fine under a settlement reached with the U.S Securities and Exchange commission. Musk will remain CEO.

Musk will resign from his role as chairman of the Tesla board within 45 days of the agreement, which was filed Saturday. He has agreed to not seek reelection or accept an appointment as chairman for three years. An independent chairman will be appointed, under the settlement agreement.

Tesla will pay a separate $20 million penalty, according to the SEC. The SEC said the charge and fine against Tesla is for failing to require disclosure controls and procedures relating to Musk’s tweets.

Musk doesn’t have to admit or deny the SEC’s allegations as part of the agreement.

Tesla has also agreed to appoint two new independent directors to its board and establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications, according to the SEC. This likely means that Musk, who frequently turns to Twitter to unveils new products, features and updates on his multiple companies, will be more restricted moving forward. At least when it comes to his tweets about Tesla.

“The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders,” Steven Peikin, co-director of the SEC’s Enforcement Division said in a statement.

The agreement marks the beginning of a new era of corporate governance for Tesla, which some shareholders have argued is too tightly controlled by Musk and others closely aligned to him such as his brother Kimbal Musk. Investor and founding board member Steve Jurvetson is still on leave.

In 2017, Tesla diversified its board and added James Rupert Murdoch, the CEO of Twenty-First Century Fox Inc., and Linda Johnson Rice,Chairman and CEO of Johnson Publishing Company.

Other board members include: Robyn Denholm, who joined the board in 2014, Brad W. Buss, who has been on since 2009, Antonio Gracias, and Ira Ehrenpreis, one of longest-serving board members who joined in 2007.

The SEC filed a complaint Thursday in federal district court alleged that Musk lied when he tweeted on August 7 that he had “funding secured” for a private takeover of the company at $420 per share. Federal securities regulators reportedly served Tesla with a subpoena just a week after the tweet. Investigations can take years before any action is taken, if at all. In this case, charges were filed just six weeks later.

The SEC said in the complaint that Musk violated anti-fraud provisions of the federal securities laws. The commission has asked the court to fine Musk and bar the billionaire entrepreneur from serving as an officer or director of a public company.

Musk described fraud charges an “unjustified action” that has left him “deeply saddened and disappointed.”

Tesla and the board later issued a joint statement supporting Musk.

The complaint contains a number of eye-browing raising details, including that he had talked to the board about an offer to take Tesla private as early as August 2 when he sent to Tesla’s board of directors, chief financial officer and general counsel an email with the subject, “Offer to Take Tesla Private at $420.”</s>Tesla CEO Elon Musk will give up his position as chairman of the company’s board and pay a $20 million fine to settle a fraud complaint with the U.S. Securities and Exchange Commission, the agency announced Saturday.

The SEC sued Musk on Thursday for misleading investors when he tweeted that he had secured financing to take the electric car maker private. Musk had earlier vowed to fight, and the SEC had sought his dismissal as CEO.

Tesla will also pay $20 million to settle a charge that, when it came to Musk’s tweets, the company failed to have required disclosure controls and procedures in place.

According to the SEC, Musk’s statements “falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote.”

Musk’s tweets caused the company’s stock price to jump by more than six percent on Aug. 7 and prompted significant market disruption, the SEC alleged.

“Neither celebrity status, nor reputation as a technological innovator, provide an exemption from the federal securities laws,” said Stephanie Avakian, co-director of enforcement for the SEC, during a press conference Thursday announcing the charges.

Under the terms of the agreement, Musk will remain the company’s chief executive but step down as chairman within 45 days. Musk will not be eligible to be chair for three years.

Tesla will name two new independent board directors and put controls and procedures in place to oversee Musk’s communication, the SEC said in a news release.

The combined $40 million in settlement money will be distributed to investors who have been harmed, according to the release.</s>Elon Musk agreed Saturday to step down as chairman of Tesla and pay a $20 million fine in a deal to settle charges brought this week by the Securities and Exchange Commission.

Under the settlement, which requires court approval, Musk will be allowed to stay as CEO but must leave his role as chairman of the board within 45 days. He cannot seek reelection for three years, according to court filings.

He accepted the deal with the SEC “without admitting or denying the allegations of the complaint,” according to a court document.

The announcement from the SEC comes two days after the agency filed a lawsuit against Musk, claiming he misled investors. The suit centers on tweets Musk sent on August 7 in which he said he had secured funding to take Tesla private at $420 a share, causing the company’s stock to soar. He had not secured the funding, the SEC said.

“I have always taken action in the best interests of truth, transparency and investors,” he said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

The SEC’s lawsuit sought to ban Musk from serving as an officer or director of any publicly traded company.

CNBC, citing unnamed sources, reported that the agency filed the suit on Thursday after Musk refused an earlier settlement offer. Under that deal, Musk would have had to pay a “nominal fine” and leave his role as chairman for two years, according to the outlet.

Tesla did not immediately reply to CNN’s request for comment.

Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk’s tweet.

The company also agreed to appoint two new independent directors to its board and establish a board committee to oversee Musk’s communications.</s>Elon Musk has settled with the US Securities and Exchange Commission, which had sued him for fraud over his tweets about taking Tesla private. Musk will have to step down as chairman, but gets to keep his CEO status.

According to the settlement filing, Musk is given 45 days to step down as chairman of the board of directors of Tesla, Inc for three years. He will also have to pay a $20 million fine.

And since the whole affair started over a tweet, either careless or intentionally misleading, Musk is required to comply withcompany oversight and pre-approval of anything he says or posts about Tesla, "in any format, including, but not limited to, posts on social media (e.g., Twitter), the Company’s website (e.g., the Company’s blog), press releases, and investor calls."

Another $20mn will be paid by Tesla to settle claims it had failed to vet Musk's initial tweet.

READ MORE: Govt agency sues Musk for fraud, wants him barred from CEO positions

The SEC complaint accused Musk of misleading investors with his August 7 tweet which said he had secured funding to take Tesla private at $420 a share, boosting the company's stock by more than 10 percent. Musk soon recanted, saying he would keep Tesla private and triggering investors' fury. The SEC ruled Musk's initial words "were false and misleading because they lacked any basis in fact."

Musk himself claimed it was an honest mistake, writing in a blog post that he was was under the impression that he had secured the money in a meeting with the representative of the Saudi Arabian sovereign wealth fund.

Musk and the SEC were reportedly nearing a milder settlement before, which would only bar Musk from being chairman for two years and would not require him to admit guilt, but Musk pulled out of it on Thursday.

Then on Friday, Tesla stock tanked, apparently causing him to change his mind again and accept the harsher conditions. However, like the old deal, the new one mentions no requirement for Musk to admit his guilt in misleading investors.

If you like this story, share it with a friend!</s>Elon Musk agrees to pay $20 million and quit as Tesla chairman in deal with SEC

(CNN Money) — Elon Musk agreed Saturday to step down as chairman of Tesla and pay a $20 million fine in a deal to settle charges brought this week by the Securities and Exchange Commission.

Under the settlement, which requires court approval, Musk will be allowed to stay as CEO but must leave his role as chairman of the board within 45 days. He cannot seek reelection for three years, according to court filings.

He accepted the deal with the SEC “without admitting or denying the allegations of the complaint,” according to a court document.

Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk’s tweet.

“The $40 million in penalties will be distributed to harmed investors under a court-approved process,” the SEC said in a press release.

The company also agreed to appoint two new independent directors to its board and establish a board committee to oversee Musk’s communications.

Tesla declined to comment. A spokesperson confirmed Musk will be permitted to remain a member of the board.

The announcement from the SEC comes two days after the agency filed a lawsuit against Musk, claiming he misled investors. The suit centers on tweets Musk sent on August 7 in which he said he had secured funding to take Tesla private at $420 a share, causing the company’s stock to soar. He had not secured the funding, the SEC said.

The lawsuit sought to ban Musk from serving as an officer or director of any publicly traded company.

“I have always taken action in the best interests of truth, transparency and investors,” he said. “Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

CNBC, citing unnamed sources, reported that the agency filed the suit on Thursday after Musk refused an earlier settlement offer. Under that deal, Musk would have had to pay a “nominal fine” and leave his role as chairman for two years. He chose not to accept the terms because “because he felt that by settling he would not be truthful to himself,” according to the outlet.

A representative for Musk did not immediately reply to CNN’s request for comment Saturday.

Jay Dubow, a partner at Pepper Hamilton and a veteran of the SEC’s enforcement division, said it was “unusual” that the SEC agreed to let Musk stay on as chief executive but exit the chairman role.

It’s surprising considering “the conduct at issue, if [the SEC] really thought it was egregious,” Dubow said. “The CEO is certainly more involved than the chairman in day-to-day operations.”

He suggested the SEC may have determined that removing Musk as CEO would cause more harm to Tesla’s share price, and thus harm investors.

Barclays analyst Brian Johnson estimated in a recent note that Tesla’s stock has a $130 “Musk premium,” which could disappear if he leaves.

Still unclear is whether or not the Department of Justice will file criminal charges against Musk.

Tesla confirmed earlier this month that the DOJ was investigating whether Musk’s comments about taking his company private constituted criminal activity.

Dubow, the former SEC official, said he suspects nothing will come of it.

“My guess is that it’s still possible the DOJ will pursue something, but…it’s more likely than not that the DOJ chooses not to pursue this,” he said.

The settlement has likely assuaged the SEC, mitigating the DOJ’s incentive to act.
Under the terms of a settlement with the U.S. Securities and Exchange Commission, Elon Musk and Tesla, Inc. agree to pay $20 million each to financial regulators, and Musk is expected to resign as chairman, but will remain as chief executive.