Elon Musk has been forced to step down as Tesla chairman and pay a fine after reaching a deal with US regulators over tweets he posted about taking the firm private.

The move follows Thursday’s decision by the US Securities and Exchange Commission (SEC) to sue Musk for alleged securities fraud.

Under the settlement Musk would remain as chief executive but must leave his other post within 45 days. Both he and the company will each pay a US$20 million fine, a British Broadcasting Corporation report said.

The agreement eases pressure on Tesla’s embattled CEO, who faced potentially being barred from serving as an officer or board member of a publicly traded company as a result of the charges.

“The settlements, which are subject to court approval, will result in comprehensive corporate governance and other reforms at Tesla, including Musk’s removal as chairman of the Tesla board, and the payment by Musk and Tesla of financial penalties” of $20 million each, the SEC said in a statement reported by Agence France-Presse.

The SEC had charged Musk with securities fraud, alleging that he misled investors when he tweeted on August 7 that he had “funding secured” to privatize the electric-auto maker at $420 a share.

That caused a brief spike in Tesla’s share price, leading so-called short-sellers, who have been betting on the stock crashing for years, to lose millions.

The SEC said Musk’s statements on Twitter were “false and misleading” and that he had never discussed the plans with company officials or potential funders.

Musk said he later decided against the plan.

“When companies and corporate insiders make statements, they must act responsibly,” SEC chairman Jay Clayton told AFP.