© Reuters. SpaceX, Twitter and Tesla CEO Elon Musk looks on as he attends a roundtable during the 6th edition of the “Choose France” Summit at the Chateau de Versailles, outside Paris, France on May 15, 2023. Ludovic Marin/Pool via REUTERS
By Jonathan Stempel
NEW YORK (Reuters) – A federal judge on Friday authorized the payout of $41.53 million to investors who lost money when Elon Musk tweeted about taking his electric car company Tesla (NASDAQ:) private.
Payouts will come from a “fair fund” created under a settlement between Musk and the U.S. Securities and Exchange Commission, arising from Musk’s August 2018 post on Twitter that he had “funding secured” for a Tesla buyout.
Musk did not in fact have funding lined up, and many investors suffered losses because the tweet made Tesla’s stock price more volatile.
The fund was originally $40 million, with Musk and Tesla each contributing $20 million, and grew to $42.3 million with interest payments. About $773,000 is being held back for taxes and other expenses.
Last week, the SEC said 3,350 claimants would share the $41.53 million payout, recouping 51.7% of their losses. The average payout would be about $12,400.
The settlement also included a consent decree where Musk gave up his role as Tesla’s chairman and agreed to let a Tesla lawyer approve some of his tweets.
Musk has sought to end the decree, saying it violated his free speech rights. He is expected to ask the U.S. Supreme Court to throw out an appeals court decision upholding the decree.
Musk is the world’s richest person, according to Forbes magazine. He bought Twitter last October and renamed it X.
The case is SEC v Musk et al, U.S. District Court, Southern District of New York, No. 18-08865.
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