Tesla and its CEO Elon Musk settled a lawsuit with the Securities and Exchange Commission on Saturday that will result in a $40 million fine and a new chairman of Tesla's board of directors. The lawsuit was filed after Musk claimed "funding secured" in tweet as he floated the idea of taking the automaker private on Aug. 7.

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Tesla will pay a $20 million fine and Musk will pay a $20 million fine as part of the settlement, and Musk will step down as chairman of the board for at least three years, with two new independent directors joining Tesla's board.

The $40 million penalty will be distributed to investors by a court-approved process that hasn't been detailed.

Tesla has not released a comment on the settlement.

"The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders," Steven Peikin, co-director of the SEC’s enforcement division, said in a statement.

It's unclear if settlement will put restrictions on Musk's personal tweeting habits.

The U.S. Department of Justice may be investigating Musk separately, but officials haven't confirmed that investigation.

This story is developing and will be updated.