As part of the settlement, the company will appoint a new independent chairman, two independent directors and control Musk's communications.
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.
Amid a slew of controversies surrounding Tesla CEO Elon Musk, there comes some good news for the electric-car company's investors and staff as the tech billionaire has now said that the company is close to achieving profitability. It indicates that the company still hasn't approached, at any sustained level over a longer time, chief executive Elon Musk's goal of producing 5,000 of the cars per week. Musk will remain CEO but will lose his Chairman seat as part of the settlement with SEC. At the moment however, Tesla has yet to name a new chairman.
The regulator stated it was charging Musk and Tesla with fraud based on "a series of false and misleading tweets about a potential transaction to take Tesla private", given that the CEO allegedly "knew that the potential transaction was uncertain and subject to numerous contingencies".
After falling 14 percent on Friday, the stock rose 17 percent today, leaving the closely watched price at $310.70 at the close.
If the company can meet targets, it will likely generate enough cash flow and profits that will underpin the company's future growth - without needing to go to the market for more funds any time soon. Since starting the production of the electric sedan previous year, the Model 3 ramp has been beset by multiple challenges, including bottlenecks in both the Fremont factory and Gigafactory 1.
Model 3 production, while impressive, is still also far below the target Tesla set itself in its Q2 investor update. Musk said in another tweet last month that Tesla has begun building its own trailers to deliver the cars.
Tesla Inc (TSLA.O) announced record quarterly auto production numbers on Tuesday but warned of major problems with selling cars in China due to new tariffs that would force it to accelerate investment in its factory in Shanghai.