Elon Musk’s "Funding Secured" Tweet Just Cost Him & Tesla $40 Million

A Tesla charging station

In case you haven't been paying attention to the news, Tesla's sort of going through a rough patch at the moment: The electric auto manufacturer's founder, Elon Musk, now has the US Securities and Exchange Commission breathing down his neck, and it's safe to say that the company's seen better days.

Under terms of the agreement, Musk also must give up his seat as chairman of the board of directors for at least three years.

Elon Musk has agreed to settle the securities fraud charge by the U.S. Securities and Exchange Commission (SEC) in a settlement that includes removing Musk as chairman at Tesla, and Musk and Tesla paying fines, the SEC said on Saturday in what analysts see as one of the fastest such settlements.

It alleged that Musk's statements - including the assertion that he had "funding secured" to take Tesla private - "were premised on a long series of baseless assumptions and were contrary to facts that Musk knew".

Tesla's shares plummeted around 14 percent on Friday over concerns about the company's future after the announcement of the fraud charges against Musk, which were a fresh blow to the mercurial Silicon Valley entrepreneur and his company.

Hitting production and delivery targets has become increasingly important for Tesla's relationship with Wall Street investors after the auto maker struggled to increase production to meet demand of its new Model 3 electric vehicle. But it quickly became clear that Musk's funding commitment-supposedly from Saudi Arabia's sovereign wealth fund-was informal at best.

After filing the lawsuit, SEC officials were anticipating a drawn-out legal battle, but settlement talks started up again late Friday after Musk's attorney Steven Farina sent an email asking to reopen the discussions.

Musk invited wrath in August when he falsely claimed on Twitter that he had secured funds for a multi-billion dollar buyout of Tesla, leading its share price to swell and creating huge losses for "short-selling" investors who had bet against the firm. Musk is Tesla's largest investor, holding a 20-percent stake in the company.

The Model 3 is seen by analysts as crucial to the carmaker's long-term prospects and Musk has promised the ramp-up will help make the company profitable in the third quarter. Tesla will also need to bring a couple more independent directors on board.

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