A United States Federal Judge authorized the SEC to begin distributing over $40 million to shareholders that the agency received from Tesla and Elon Musk as part of a 2018 settlement. The SEC filed the request to begin distributing the funds in March, three and a half years after Tesla and Musk paid their $20 million fines to the agency in late 2018.
U.S. District Judge Alison Nathan approved the plan to pay out the now $41.2 million fund, which has increased due to interest, to shareholders affected by Tweets Musk sent in August 2018 that indicated he was proposing taking Tesla private. The SEC requested the payout on March 9, just 10 hours after Musk requested the regulator throw out a 2018 consent decree and accused the SEC of dragging its feet to give affected investors their money.
Reuters first reported the story.
Musk and Tesla, the electric automaker Musk has grown into the most valuable car company on Earth, both paid $20 million in fines due to the Tweets. In addition to the fines, Musk was required to step down as Tesla’s Chairman and be replaced by an independent Chairman. Musk would be ineligible to regain the status for three years. Tesla also was required to promote two new members to its board and establish a committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications.
Musk has requested the 2018 consent decree be thrown out by a federal judge. “I never lied to shareholders,” Musk said regarding the decree. “I entered into the consent decree for the survival of Tesla, for the sake of its shareholders.”
During a hearing on March 10, U.S. District Judge Edward Chen stated Musk’s Tweets were “not factually very complicated” as “funding had not been secured” by Tesla. Judge Chen was skeptical of the Tweets, not convinced they were entirely truthful. While he did not come to a conclusion on whether the decree would be thrown out, the SEC reiterated that it opposed Musk’s request.
Apart from the payout plan, Musk is also in another spat with the SEC over his 2021 Twitter poll that asked his over 40 million followers at the time whether he should sell 10 percent of his Tesla shares to cover a hefty $15 billion tax bill this year. Musk ended his stock sale on December 30, according to SEC filings.
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