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Illustration: Sarah Grillo/Axios

Elon Musk has reached a settlement with federal regulators, which had sued him on Thursday for making misleading material statements. He will get to remain as Tesla's CEO, but must step down as chairman.

The bottom line: This is a smart decision for both Musk and Tesla, as a drawn-out court case would have clouded both of their futures for months to come.

The background: Musk got into hot water for tweets related to his efforts to take Tesla private, particularly claiming that he had "funding secured" at $420 per share, even though the SEC claims he never discussed that specific price with prospective investors.

  • Musk reportedly had been ready to settle with the SEC last week, but then backed out of the deal because he felt the charges were unjustified.
  • The SEC responded with a lawsuit, which could have resulted in him being barred from serving as an officer or director of any public company for years.

Tesla has been struggling to show it can sustainably continue expanding production of the Model 3 sedan that’s critical to the company’s future.

Settlement details: Musk gets to remain as CEO, but within 45 days must step down as chairman for a period of three years. He also must pay a $20 million penalty, and comply with new company procedures for any future communications related to Tesla, including via his Twitter account.

  • Musk neither admits nor denies the allegations brought forth by the SEC.

Tesla, which was not a defendant in Tuesday's lawsuit, also will be required to pay a $20 million penalty, and add two new independent directors. Those details are included in a separate settlement from the one posted below, which is only with Musk.

Thought bubble: Kelly Blue Book executive analyst Rebecca Lindland writes, "A new chairman will also provide much needed guidance and the new board members governance to Tesla as a company and allow Elon to continue with his vision of changing the face of mobility."

  • Elon can’t just replace himself with a chairman of his choosing — the company has to appoint an independent chairman. Tesla has to hire a Securities Counsel whose job it will be to vet all Elon tweets before they go out.

Go deeper: Elon Musk throws a Tesla tantrum

Go deeper

Mike Allen, author of AM
3 hours ago - World

Courage vs. coddling with China

Peng Shuai of China serves during the China Open in Beijing in 2017. Photo: Andy Wong/AP

The women's professional tennis tour suspended tournaments in China Wednesday out of concern for Peng Shuai, on the same day that a top business voice made excuses for Beijing.

Why it matters: Ahead of February's Winter Olympics in Beijing, some sports figures are taking on the regime — while Big Business shrinks from confrontation with the world's second-largest economy.

3 hours ago - Sports

What to know about the first MLB lockout since 1995

Illustration: Shoshana Gordon/Axios

Hope you enjoyed the recent flurry of free-agent activity, because it's likely the last non-lockout-related MLB news for a while.

Driving the news: The owners locked out the players after the collective bargaining agreement expired at midnight last night, leading to MLB's ninth work stoppage — and first since 1995.

Biden extends mask mandates for travelers into 2022

President Biden delivers remarks at the White House on Dec. 1. Photo: Anna Moneymaker via Getty Images

President Biden will announce new testing protocols for international travelers on Thursday and extend masking requirements through March as the U.S. prepares to fight the Omicron variant this winter, according to senior administration officials.

Driving the news: The U.S. will tighten pre-departure testing protocols starting early next week by requiring all inbound international travelers to take COVID-19 tests within one day of their departure rather than three.

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