Elon Musk to buy $20 million in Tesla stock

Tesla Inc Chief Executive Officer Elon Musk will purchase company stock worth $20 million in the next open trading session, the electric carmaker said in a filing on Wednesday.

Tesla and Musk have each agreed to pay $20 million under a settlement with the US Securities and Exchange Commission of a fraud lawsuit relating to tweets by Musk in August.

"Separate and apart from the settlement, Elon has notified Tesla that he intends to purchase from Tesla, and Tesla expects that it will issue and sell to Elon, $20 million of Tesla's common stock during the next open trading window at the then-current market price," the filing read.

Tesla shares fell 1 percent Wednesday morning following the filing. Musk is the largest shareholder in Tesla, holding more than $9 billion worth of the stock or more than 33 million shares before Wednesday's announcement. The CEO bought $24 million worth of Tesla in June and $9.9 million in May, according to InsiderScore.com.

The deal, viewed as a positive development for embattled Palo Alto, California-based Tesla, requires Musk to pay a $20 million fine and step down as Tesla chairman for a period of at least three years. The company is also obligated to monitor the CEO's statements to the public concerning the company on Twitter, blog posts or any other medium.

The company will also appoint two additional independent directors to the board within 90 days of the filing of the settlement documents.

Musk tweeted in August that he was debating taking Tesla private, telling his followers on Twitter, "Funding secured." The tweet sparked a scandal for Tesla and sent shares through a bout of volatility for weeks.

Following the ensuring firestorm, Musk later said conversations with the Saudi sovereign wealth fund left him confident funding was assured at his proposed price of $420 per share. The SEC sued Musk on Sept. 27 for securities fraud.