Credit: AP via SCMP

Elon Musk is in hot water. In mid-August of this year, the CEO of Tesla took to Twitter to express his plans to make the company a private corporation. Claiming that shares would cost $420 USD a pop, a significant increase from the current $342, it seemed that investors responded, making the CEO $1.4 billion richer overnight. Since then, many have accused the business-man of committing fraud in a money-making scheme following sagging stocks – and the US Securities and Exchange Commission (SEC) was not happy.

The SEC’s complaint alleged that Musk had made “false and misleading” statements, and on Friday he caved, with a $40 million USD agreement filed. According to the agreement – which is still subject for court approval – the CEO must resign as chairman for at least three years, as well as pay a $20 million USD fine.

“The $40 million in penalties will be distributed to harmed investors under a court-approved process. The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders,” said SEC enforcement division co-director Steven Peikin.”

The Tesla stock crashed 14 percent on Friday after the SEC filed its lawsuit, erasing more than $7 billion in shareholder wealth.

Stay tuned for further developments.