Avakian and Peikin demanded that Musk pay $20 million and be removed as Tesla's chairman for at least three years, harsher terms than were being offered in the scrapped deal, people familiar with the matter said.
Tesla must hire an independent chair to oversee the company. With its meteoric rsie, Tesla has practically recovered the losses it incurred last week after the SEC announced that it was filing a lawsuit against Elon Musk over his "funding secured" Twitter announcement last August.
Musk's tweet about taking his company private, along with attacks on critics on social media, raised concerns with investors about whether Musk has become too focused on criticism from so-called short-sellers who had been making bets against him and Tesla.
The SEC's lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors.
At the same time, Tesla has also settled new charges of "failing to have required disclosure controls and procedures relating to Musk's tweets", and will also pay a penalty of $20m. On Friday, its stock dropped nearly 14 per cent.
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.More news: UK's labour opposition to vote against Brexit deal
In the Chicago suburb of Highland Park, more than 75 people crammed into Tesla's service center and another 50 or so waited outside.
"When companies and corporate insiders make statements, they must act responsibly", SEC Chairman Jay Clayton said.
"Shareholders with Tesla will be able to go to sleep tonight knowing the Musk will remain at the helm of the company".
"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", Peikin added. Tesla did not immediately respond to a request for comment and Musk could not immediately be reached for comment.
But its shares have been hit hard since the SEC filed the lawsuit.
But several experienced litigators said on Monday that, while the DOJ probe is separate, the SEC's settlement could mark the end of official action against Tesla and Musk. With products like the Model S, Model X and, even with its production woes, the Model 3, it's easy to see why.