Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.
Musk will remain Tesla CEO after settling SEC fraud charges over his infamous "funding secured" tweet about taking the auto firm private.
In any case, the $40 million, which will be distributed to harmed shareholders after a court-approved process, are but a very small fraction of the more than $7 billion lost due to the whole debacle.
Shares of Tesla Inc (TSLA.O) jumped almost 16 percent on Monday after Chief Executive Elon Musk settled with the U.S. Securities and Exchange Commission (SEC) over charges of misleading investors, heading off moves to force him out.
Less than two days later, Musk and the SEC reached an agreement, in which he would step down as chairman for three years and pay a $20 million fine.
Two "independent directors" will also be appointed by Tesla, and the company will set up a new committee of independent directors and "put in place additional controls and procedures to oversee Musk's communications", the SEC said.
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In a follow-up company blog post issued August 13, Musk explained that his assertion of having "funding secured" was based on multiple encounters he had with the Saudi Arabian sovereign wealth fund, where he felt there was "no question that a deal with the Saudi sovereign fund could be closed".
Musk will purchase $20 million worth of the company's stock in the next trading opportunity, according to a person familiar with his plans.
Tesla shares sank last week after the SEC filed a lawsuit accusing Musk of securities fraud and demanding the Silicon Valley billionaire be removed his role as chief executive.
"We believe Musk's settlement with the SEC is positive for all stakeholders and should allow TSLA to return its focus to producing quality cars", Baird analyst Ben Kallo said.
As part of a settlement of charges that Mr Musk misled investors, he will no longer sit at the head of the boardroom table. The SEC's complaint alleged that Musk had made "false and misleading" statements, with Tesla's share price having risen on the back of Musk's tweet.