A U.S. judge approved Tesla Inc. and Chief Executive Elon Musk’s US$40 million settlement with the U.S. Securities and Exchange Commission, resolving government claims that Musk misled the public with a flurry of tweets about a plan to take the company private.

U.S. District Judge Alison Nathan in Manhattan signed off on the accord Tuesday after the electric-car maker, Musk and the regulatory agency said in a detailed joint filing that the deal was in the best interest of investors. The company will pay US$20 million and Musk will also pay US$20 million.

The judge’s decision was largely expected, even after Musk muddled the process by insulting the SEC in a series of tweets just a few days after reaching the deal.

The ruling allows Palo Alto, California-based Tesla to resolve an unwelcome distraction as its core business of making electric vehicles is improving. The company hit its targets for production and deliveries in the third quarter as the Model 3 sedan climbed the ranks of the top-selling cars in the U.S. market. Total output of the model probably exceeded 100,000 last week, according to Bloomberg’s tracker.

Tesla rose 4.2 per cent at 11:21 a.m. in New York trading.

Judy Burns, an SEC spokeswoman, didn’t immediately respond to a request for comment.

The SEC probe was triggered by Musk’s Aug. 7 tweet that he had “funding secured” to take Tesla private.

The shares surged as much as 13 per cent after the tweet, and trading was temporarily halted. But within hours, questions began to swirl around Musk’s claims, and the SEC quickly opened an investigation. The agency moved with unusual speed, questioning Musk, Tesla’s board and other executives.

Musk and Tesla agreed to resolve the probe without admitting or denying wrongdoing. The plan called for their combined US$40 million in penalties to be distributed to harmed shareholders through a court-approved process, the SEC has said. The deal also calls for a new chairman to be appointed, and the naming of two new independent directors.

Within days of the settlement, Musk shot off a tweet referring to the SEC as the “Shortseller Enrichment Commission" and sarcastically praising the regulator’s work. Experts said the tweet could be viewed, problematically, as a denial of wrongdoing by Musk, but they said it wasn’t likely to derail the deal.