By Tsvetana Paraskova of OilPrice.com,
The U.S. Securities and Exchange Commission has asked a judge to approve a plan to distribute to investors the $40 million Tesla and Elon Musk have agreed to pay to settle a case over Musk’s infamous tweet from 2018 that he had secured funding to take the EV car manufacturer private.
The SEC filed a request with a judge this week to pay out $41.5 million to 3,350 eligible claimants who had sued Musk for the “funding secured” tweet. That’s around $12,400 per investor, on average.
The judge in the case has said he would endorse the SEC proposal for payments to the investor claimants on September 1 if Musk or Tesla do not object to the plan.
Investors in Tesla have sued Musk for misleading and defrauding them after the Tesla founder tweeted in August 2018, “Am considering taking Tesla private at $420. Funding secured.”
The tweet sparked wide speculation and wild swings in the share price of Tesla, while a deal never happened, although Musk has claimed he had a handshake deal with investors from Saudi Arabia to help fund taking Tesla private.
Musk backtracked on the idea to take Tesla private two weeks later. Tesla will stay public, Musk said on August 24, 2018, ending more than two weeks of speculation and calculation about how much a go-private deal would cost and who could be involved in it.
A month later, the SEC charged Musk in September 2018 with securities fraud for the infamous tweets about taking Tesla private at $420 per share and for claiming “funding secured” for a potential deal. A few days later, Musk agreed to settle the securities fraud charge by the SEC in a settlement that included removing Musk as chairman at Tesla, and Musk and Tesla paying fines of $20 million each.