Investors who lost money when Elon Musk tweeted about taking his electric car company Tesla private may soon collect from a $42.3 million fund set up when Musk settled federal securities fraud charges.
In a Wednesday night court filing, the U.S. Securities and Exchange Commission said 3,350 eligible claimants will share in a $41.53 million payout, recouping 51.7% of their losses. Other sums will be held back for fees, taxes, and expenses.
The “fair fund” was created under a settlement arising from Musk’s August 2018 tweet that he had “funding secured” for a Tesla buyout at a premium. He did not, and many investors lost money during the resulting volatility in Tesla’s stock price.
The fund was originally $40 million, with Musk and Tesla each contributing $20 million. It grew to $42.3 million with interest payments. U.S. District Judge Lewis Liman in Manhattan, who oversees the case, on Thursday, said he intends to approve the payouts by Sept. 1 or shortly afterward if no one objects.
The SEC settlement also included a consent decree under which Musk gave up his role as Tesla’s chairman and agreed to let a Tesla lawyer approve some of his Twitter posts. Musk – the world’s richest person, according to Forbes magazine – bought Twitter last October and renamed it X.
He has sought to end the decree, labeling it a “muzzle” on his free speech, but in May the federal appeals court in Manhattan refused to throw it out. Musk is expected to appeal that decision to the U.S. Supreme Court. The case is SEC v Musk et al, U.S. District Court, Southern District of New York, No. 18-08865.
