Investors who suffered financial losses due to Elon Musk’s tweet about potentially taking his electric car company Tesla (NASDAQ:TSLA) private might soon be able to recover from a $42.3 million fund established as part of Musk’s settlement for federal securities fraud charges.
According to a court filing on Wednesday night, the U.S. Securities and Exchange Commission stated that around 3,350 eligible claimants will share a $41.53 million payout, allowing them to recoup 51.7% of their losses. Some of the funds will be reserved for covering fees, taxes, and other expenses.
The “fair fund” was created as a result of a settlement following Musk’s tweet in August 2018 claiming he had secured funding for a premium-priced Tesla buyout. This statement turned out to be false, leading to significant financial losses for many investors during the subsequent volatility in Tesla’s stock price.
Initially set at $40 million, the fund saw contributions of $20 million each from Musk and Tesla. With the inclusion of interest payments, it grew to $42.3 million.
U.S. District Judge Lewis Liman in Manhattan, overseeing the case, indicated his intention to approve the payouts by September 1st or shortly thereafter, unless any objections arise.
As part of the SEC settlement, Musk also agreed to a consent decree that required him to step down from his role as Tesla’s chairman and allowed a Tesla lawyer to review certain Twitter posts before publishing.
Musk, recognized by Forbes magazine as the world’s wealthiest person, acquired Twitter in October of the previous year and changed its name to X.
Despite his efforts to challenge the decree, claiming it restricted his freedom of speech, the federal appeals court in Manhattan declined to dismiss it in May.
Musk is expected to appeal this decision to the U.S. Supreme Court.
The case is identified as SEC v Musk et al, handled in the U.S. District Court, Southern District of New York, with reference No. 18-08865.
