SEC filed a lawsuit against Mr Musk, alleging he misled investors in an August 7 tweet, which indicated he had “secured” sufficient funding to take Tesla private at $420 (£320) per share.
The business magnate settled the charges with the SEC on Saturday, which forced both him and Tesla to pay $20million (£15million) and for him to step down as chairman for at least three years.
It has now emerged Mr Musk will be able to lead the company’s board again but a majority of shareholders will need to vote him in.
US District Judge Alison Nathan demanded the court brief to show the settlement was “fair and reasonable”.
SEC’s ruling nevertheless allowed the business mogul to remain as the company’s chief executive.
Son of the media emperor Rupert Murdoch, James, appears to be the top contender to replace Mr Musk as chairman.
According to the FT, Mr Murdoch is already an independent director of Tesla and he has expressed interest in the chairmanship.
He joined the board last year after previously working with various media companies.
While Mr Musk is required to relinquish control for several years, there are concerns no one will be able to match his personality.
CEO of the corporate governance consulting company Boardspan, Abby Adlerman, said: “The question when it comes to James Murdoch is, ‘Is he the guy who’ll be able to establish that level of authority with Elon Musk?’”
However, it seems like the business mogul might have aggravated the situation shortly after SEC’s ruling.
He taunted the regulator just days after the settlement was announced, calling SEC the “Shortseller Enrichment Commission” before praising it for “doing incredible work”.
Former SEC lawyers warned Mr Musk against making further mocking statements regarding the SEC.
Alma Angotti, an ex-enforcement official, claimed Mr Musk’s behaviour could affect the company.
She said: “Granted it has only been three days, but it may have been sensible to ask him not to tweet anything related to the company until they had an opportunity to put in the policies, procedures and controls required by the settlement.”
In a direct attack on Mr Musk, she added: “It bolsters the SEC’s argument that he is uncontrollable.
“It also bolsters the SEC argument that the motive for the false and misleading tweets about taking the company private was to thwart short sellers.”
Source : EXPRESS