Payouts expected from Elon Musk's SEC settlement
INVESTORS who lost money when Elon Musk tweeted about taking his electric car company Tesla private may soon collect from a US$42.3 million fund set up when he settled federal securities fraud charges.
In a Wednesday night court filing, the US Securities and Exchange Commission (SEC) said 3,350 eligible claimants will share in a US$41.53 million payout, recouping 51.7 per cent 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 US$40 million, with Musk and Tesla each contributing US$20 million. It grew to US$42.3 million with interest payments.
US District Judge Lewis Liman in Manhattan, who oversees the case, on Thursday (Aug 24) said he intends to approve the payouts by Sep 1 or shortly afterward if no one objects.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
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, identified by Forbes magazine as the world’s richest person, bought Twitter last October and renamed it X.
He has sought to end the decree, labelling 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 US Supreme Court.
The case is SEC v Musk et al, US District Court, Southern District of New York, No. 18-08865. REUTERS
Share with us your feedback on BT's products and services
