However, the concessions that follow have given Musk a sigh of relief.
Elon Musk Tweet: The Reckless, Expensive Tweet! "The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", said SEC enforcement division co-director Steven Peikin.
The agreement with the US Securities and Exchange Commission will come as a relief to investors, who had feared a lengthy legal fight.
The tweet caused Tesla's stock price to jump and, according to the SEC, "led to significant market disruption". 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.
Elon Musk, however, is found shrugging off all the allegations made against him. Taking ocean transport costs and import tariffs into account, Tesla is now operating at a 55% to 60% cost disadvantage compared to the exact same auto locally produced in China.
Shares went up more than 17 percent on Monday, making back almost all of the losses that occurred last Friday in the wake of the SEC's lawsuit against Musk. "Specifically, when companies and corporate insiders make statements, they must act responsibly".
"The SEC's complaint alleged that, in truth, Musk knew that the potential transaction was uncertain and subject to numerous contingencies".
As of Friday afternoon, Tesla's stock price dropped by 14 percent to $264.77, erasing $7.3 billion in shareholder value.
To play safe, without further ado, Musk and Tesla have agreed to settle the charges.
Many see the forced changes as being positive for Tesla, partly because the mercurial Musk will now have someone to answer to, and partly because his reduced role may allow the chronically overworked CEO to focus more.
Avakian and Peikin demanded that Musk pay $20m and be removed as Tesla's chairman for at least three years, harsher terms than were being offered in the scrapped deal, people familiar with the matter said. Tesla's free cash flow in the second quarter totaled negative $739.5 million, bringing the company to a net loss of $717.5 million, the company reported in August. The company will also have to keep an eye on Musk's conversations and communications with investors. It's expected they'll want $40 million in fines to then dish out to investors, but it's believed that they could push for more.