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"What it tells us is this board, as a strategic plan, must be using the Jim Jones Jonestown suicide pact. They are drinking the Kool-Aid of the founder. It is completely as self-destructive as Musk is," Sonnenfeld said on "Squawk Alley."
Neither Musk nor Tesla were immediately available for comment.
Musk has been sued by the SEC for fraud, according to court documents filed Thursday.
Shares of Tesla were down more than 10 percent Friday, on pace for their worst session in nearly five years.
On Aug. 7, Musk tweeted he was considering taking Tesla private, adding "funding secured." The tweet spurred a scandal-ridden fall for Tesla and sent the stock seesawing for weeks. The take-private idea was abandoned on Aug. 24.
Under the deal, Musk and Tesla would have had to pay a nominal fine, and the CEO would not have had to admit any guilt, said CNBC's David Faber, citing sources.
But those sources said Musk would have been barred from being chairman for two years and Tesla would have to appoint two new independent directors.
"It was an unbelievably generous deal," said Sonnenfeld, a senior associate dean at the Yale School of Management.
So good, in fact, that former SEC Chairman Richard Breeden said the agency likely sees Musk's and the board's decisions to turn down the deal "as another reckless act by Tesla."
"The SEC put a ladder up to the limb [that Musk is] on and tried to give him a graceful way out, showing I think fairly clearly … they are trying to avoid worse damage to the company," Breeden said in the same "Squawk Alley" interview as Sonnenfeld. "But they can't stand by … and have a recklessly false — at a minimum — tweet go into the marketplace."
Breeden said Tesla's actions don't necessarily rule out the possibility of another settlement, but it likely won't be the same deal.
"Every day that goes by, Musk makes it more difficult for them to leave him as CEO. The first deal would have left that and that's going to get harder," he said.
Jason Calacanis, a tech entrepreneur and personal friend of Musk, said he felt the first settlement seemed "reasonable."
"The SEC is in a horrible position here, because they don't want to destroy Tesla," Calacanis said Friday in a separate interview on "Squawk Alley."
"My guess is that they're probably talking right now, and they'll probably continue to talk, and they'll settle this — because they have to. You can't take America's greatest CEO out of the game," he added.
Sonnenfeld, also president of a nonprofit dedicated to CEO leadership and corporate governance, agreed that Musk is vital to the company. He urged Tesla's board to devise a plan to keep Musk there, but rein him in.
"The board has to somehow come up with a plan to both retain Musk, because he is so critical to the valuation," he said. But at the same time, the directors need to "restrain him" from further damaging the company or its shareholders, he added.
"They've got to put him in roles that are less damaging. They've got to control his tweetstorms — taking on investors, analysts, journalists and other critics of the company. He's out of control that way," Sonnenfeld contended.
Tesla's board has faced criticism from both investors and advocates who question its independence and oversight of Musk.
"The best autonomous driving that apparently Tesla has right now is that this board is on cruise control, they're doing nothing. They have great reasons to act, too," Sonnenfeld added.
In a statement, the board said, "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."