Elon Musk to Resign as Chair of Tesla Board but Remain CEO

They also hoped the settlement would cap several months of volatility around Tesla's shares driven by a series of tweets and public pronouncements by Mr Musk. Munster pointed out that the terms of the settlement actually works in Tesla's favor, as the appointment of a new, capable Chairman of the Board could help Tesla reach sustainability, as well as become the wake-up call that Musk needs with regards to his behavior online.

Musk and Tesla will each pay $20 million under the settlement, the SEC said in a statement Saturday.

Musk, whose tweets on August 7 on a plan to take Tesla private that was later abandoned, has tweeted only once since the settlement was announced - posting a music video by rap group Naughty by Nature. Tesla shares plummeted 14% on Friday, the biggest drop in nearly five years.

Tesla in recent years has become one of the most valuable American vehicle maker, with its stock worth more than $50 billion.

In any case, the $40 million, which will be distributed to harmed shareholders after a court-approved process, are but a very small fraction of the more than $7 billion lost due to the whole debacle.

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The auto company has been aiming to hit a production target of between 50,000 and 55,000 vehicles per week, according to the company's own estimates.

Furthermore, it adds: "Despite notifying the market in 2013 that it intended to use Musk's Twitter account as a means of announcing material information about Tesla and encouraging investors to review Musk's tweets, Tesla had no disclosure controls or procedures in place to determine whether Musk's tweets contained information required to be disclosed in Tesla's SEC filings". And during a Reddit AMA the same year, he said "in Musk I trust" when asked if Telsa will make it as a auto company.

Under the agreement - which Clayton said was "in the best interests of our markets and our investors, including the shareholders of Tesla" - Musk will be ineligible to serve as chairman of the board for a period of three years and will be replaced by an "independent chairman", according to the SEC.

He arrived at the $420 a share figure by assuming a 20 percent premium on Tesla shares and rounding up one dollar because "he had recently learned about the number's significance in marijuana culture", and to impress his girlfriend, according to the SEC's complaint. Tesla is due to appoint two new independent directors, with the board expected to oversee Musk's communications with investors.

Gore has previously noted his admiration for Tesla and Musk.

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