Musk says $20M stock purchase an ‘investment’

Elon Musk will buy $20 million of Tesla stock, according to a filing Wednesday that laid out details of Musk and Tesla’s just-approved settlement with the SEC — but which noted the stock purchase was a CEO investment and “separate and apart from the settlement.”

Musk and Tesla must each pay $20 million to settle fraud charges stemming from the Tesla CEO’s tweeted declaration on August 7 that he had “secured funding” to take the electric-car maker private. That turned out not to be the case, and the SEC said the take-private speculation, which lasted for a couple of weeks, hurt investors.

The filing with the Securities and Exchange Commission also reiterates other parts of the settlement, including that Musk will resign as chairman of Tesla’s board within 45 days of the settlement documents’ filing. The settlement was approved by a judge Monday.

“In three years, the Board will be able to reappoint Elon to resume the role of Chairman of the Board if such reappointment is approved by a majority vote of stockholders at such time,” according to the filing. Before Musk agreed to the settlement, the SEC had sought to remove him as CEO.

Within 90 days of the

settlement documents’ filing, Tesla must add two new independent board members. The company must also form a board

committee of independent directors to make sure it is complying with the settlement — including implementing “controls governing Tesla and its management’s public statements regarding Tesla.”

And specifically about Musk — source of the $40

million tweet — Tesla must: “Further enhance controls with respect to Elon’s public communications regarding Tesla and to pre-approve any such written communications that contain, or reasonably could contain, information material to Tesla or its stockholders.”

Tesla’s CEO will buy the stock during the next open trading window, according to the filing. Musk is already the largest shareholder in the Palo Alto company, holding about 20 percent of its shares.

“It was mainly a symbolic announcement,” said

Garrett Nelson, Tesla analyst with investment research firm CFRA, Wednesday. “Obviously it’s equal to the amount of the settlement. What’s important is that there will be a new chairman, and certain measures are going to be imposed on Elon Musk which should help curb the erratic behavior we’ve seen in past several months.”

Tesla shares initially rose after the filing but are down about 2.8 percent to $268.85 Wednesday.