Elon Musk has been fined and must step down as Tesla chair following accusations of securities fraud, involving tweets he posted about taking the company private.

On Thursday, the Securities and Exchange Commission (SEC), had announced its decision to sue Musk over alleged securities fraud.

As part of a settlement with the SEC, Musk will step down as the electronic car manufacturer’s chairman for three years, but will remain as CEO. Musk and Tesla also need to pay a $20 million (£15 million) fine.

SEC chairman Jay Clayton said he “supported” the deal, adding that he feels it is in the best interests of US investors and markets.

He said: “This matter reaffirms an important principle embodied in our disclosure-based federal securities laws.

“Specifically, when companies and corporate insiders make statements, they must act responsibly, including endeavouring to ensure the statements are not false or misleading and do not omit information a reasonable investor would consider important in making an investment decision.”

The allegations of fraud surround a tweet Musk posted in August, in which he stated he was considering taking Tesla off the stock market and into private ownership.

He mentioned he had “funding secured” for the proposal that would value Tesla at $420 per share. After his announcement, shares in the company temporarily rose before dropping again.

The SEC described his claims as “false and misleading”, adding: “In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”

Musk has 45 days to depart from his role as chairman of Tesla, and must also comply with company communications procedures when tweeting about the firm.