Following a deal with the US financial regulator, Elon Musk is to step down as the group’s chair and pay a fine.

Following the misleading tweets that Musk wrote about taking the firm private, he will step down as chair within the next 45 days as well as pay a combined fine of $40 million (£30.6 million) fine.

Musk will continue with his role as chief executive.

In a tweet sent in August, Musk said he was considering taking Tesla (NASDAQ: TSLA) private and had the “funding secured”, which would value Tesla at $420 a share.

The plan was abandoned just two weeks later, causing havoc to shares and investors accusing the chief executive of having no basis to the tweets.

Last Friday the share price in the car company was down close to 14 percent as investors lost yet further confidence.

The group’s boss is well known for his erratic behaviour. In the past few months he has smoked marijuana while appearing on a podcast and attacked a British cave expert involved in the rescue of a Thai football team by accusing him of being a paedophile.

Stephanie Avakian, who is the SEC’s co-director of enforcement, said in a statement: “The total package of remedies and relief announced today are specifically designed to address the misconduct at issue by strengthening Tesla’s corporate governance and oversight in order to protect investors.”

$20 million of the fine will be paid by Musk, whilst the remaining $20 million will be paid by Tesla. The group is worth over $20 billion and will not struggle in paying the fine.

Following the boss’s departure from the board, the group will appoint two new independent board directors to check on Musk’s control over the business.

Tesla and Musk have not yet commented on the fine.