Video report by ITV News Correspondent Richard Pallot
Elon Musk will step down as chairman of Tesla and pay a $20 million (£15m) fine to settle a lawsuit alleging he duped investors about a proposed buyout of the company.
Both Mr Musk and the electric car company will pay out $20m in the deal after the Securities and Exchange Commission (SEC) filed a case seeking to oust the billionaire.
The settlement will require him to relinquish his role as chairman for at least three years, but he will able to remain as chief executive. Tesla must hire an independent chairman to oversee the company.
The complaint alleged that Mr Musk made “false and misleading statements” about plans to take the company private in August.
In the complaint filed on Thursday, the Securities and Exchange Commission said he falsely claimed funding was secured to take the company private at $420 per share.
The complaint states he settled on $420 “because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend 'would find it funny'.”
Tesla's stock plummeted 14% on Friday after the SEC filed its lawsuit, erasing more than $7 billion (£5.3bn) in shareholder wealth. Many analysts predicted the shares would fall further if Mr Musk was forced to step down.
The steep downturn in Tesla's market value may have influenced him to have an apparent change of heart and negotiate a settlement.
He had rejected a similar settlement offer before the SEC sued on Thursday, maintaining he had done nothing wrong when he posted an August 7 tweet declaring he had secured the financing to lead a buyout of Tesla.
The SEC alleged Mr Musk was not close to locking up the estimated $25bn to $50bn (£19bn to £38bn) needed to pull off the buyout.
Mr Musk and Tesla reached their settlement without admitting to or denying the SEC's allegations.