The SEC has agreed to a deal with Elon Musk, CEO and Chairman of Tesla Inc. (NASDAQ: TSLA) which will push him out as chairman, but will allow him to stay as CEO. He will pay a $20 million fine. Tesla will also pay $20 million. The settlement is due to earlier charges that he had committed fraud by claiming he had financial backing to take Tesla private, which briefly drove the company’s share up.

In a statement, the SEC said:

Musk and Tesla have agreed to settle the charges against them without admitting or denying the SEC’s allegations. Among other relief, the settlements require that:
Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman. Musk will be ineligible to be re-elected Chairman for three years;
Tesla will appoint a total of two new independent directors to its board;
Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications;
Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
“The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.

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