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Yesterday we brought you the news that Elon Musk is actually getting charged with fraud by the SEC over misleading statements the Tesla Motors CEO made in August. Today we can tell you that Musk was, in fact, aware of pending charges and that he was actively negotiating with the U.S. Securities and Exchange Commision for a no-guilt settlement.

Elon had the chance to settle the case but he decided to pull the plug at the last minute.

The deal would have seen both Elon Musk and Tesla paying a nominal fine along with one main penalty: the CEO could remain at his post but he could not serve as board chairman for two years. It would require Tesla to appoint two new independentdirectors. The main point is that Elon would not have to admit a shred of guilt.

Musk reportedly said this would compromise his character and so he backed out at the last minute, which prompted the formal charges. He also believed he wouldn't have been able to live with the fact that he agreed to culpability when he feels he personally did no wrong.

It seems Elon's personal integrity is getting priority over millions of investors' stakes in Tesla as an ongoing case against the SEC will cast a very long shadow over Tesla stock for quite some time - possibly years if this thing drags out.

Tesla will be much more challenged to raise funds, private or public, with such a large uncertainty hanging in the air. Why the rogue CEO wouldn't want to settle this whole and put his company's interests first aren't clear, especially when one considers the punishment the SEC was seeking was relatively light.

Tesla's board has this somewhat boring statement released yesterday:

Tesla and the board of directors are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century. Our focus remains on the continued ramp of Model 3 production and delivering for our customers, shareholders and employees.

In the meantime, Tesla (NASDAQ:TSLA) stock is down big, very big. Today's ~14 percent drop was the worst day in Tesla's history since way back in 2013.