Things are looking downright messy right now for Elon Musk and Tesla following a lawsuit by the Securities and Exchange Commission on Thursday accusing the CEO of securities fraud for his infamous "funding secured" tweet about taking the automaker private. Now come reports that say Musk turned down the opportunity to settle with the agency at the last minute.

The Wall Street Journal first reported the news, which was also confirmed by CNBC, citing unnamed sources. The network says Musk and Tesla would have had to pay a nominal fine and admit no guilt, but the proposed deal would have required him to step down as chairman for two years and forced Tesla to appoint two new independent directors. Tesla has not responded to the news about the proposed settlement with the SEC.

Musk reportedly refused to sign the deal at the last minute because he felt he would not be truthful to himself and wouldn't have been able to live with the idea he'd agreed to accept a settlement and any associated blemish.

Musk has uncharacteristically been quiet on Twitter since his last tweet on Wednesday. On Thursday, he released a statement calling the SEC lawsuit "unjustified" and said, "I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way."

But news of the lawsuit has sent Tesla's shares tumbling — they were down nearly 12 percent as of this writing on Friday. Wall Street analysts are speculating that he may have to resign his position, adding that the electric carmaker could find it difficult to raise needed capital at affordable rates without him as the company's figurehead and visionary.

Musk published his infamous tweet about taking Tesla private on Aug. 7, briefly sending the company's stock price to a 52-week high before falling after it became clear the board had no information about his plans or funding sources and that the "funding secured" statement was unfounded. In its lawsuit, the SEC alleges he proposed the per-share valuation by assuming a 20-percent premium and rounding up to $420 "because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it funny, which admittedly is not a great reason to pick a price.'" Musk at the time was dating pop musician Grimes.

The SEC complaint also alleges that "Musk did not discuss a $420 price per share with any potential funding source for a Tesla going-private transaction" prior to emailing the board about his proposal on Aug. 2. The company's board reportedly held a telephone meeting the next night in which it urged Musk to contact investors about their interest in staying with Tesla as a private company and report back with his findings.

It says Musk failed to communicate with members of the Saudi Sovereign Wealth fund, which had recently invested in Tesla and was touted as a potential source of funds to go private, and had likewise not discussed the proposal with any funding source or existing investors before sending the "funding secured" tweet and several follow-ups on Aug. 7. The complaint alleges he also failed to notify Nasdaq in violation of its rules.