The Fair Fund originated when Elon Musk and Tesla each paid $20 million in civil penalties without admitting wrongdoing after Musk tweeted that he had funding secured to take the company private. Distribution to harmed investors has officially concluded, with a claims administrator disbursing $41.53 million in principal and interest to thousands of approved applicants. However, because aggregate investor losses surpassed the money available, recipients recovered just over half of their approved losses. A final leftover balance of roughly $449,000 will be deposited into the U.S. Treasury.
Key points
The Manhattan federal court has been asked to formally terminate the Fair Fund following…: The Manhattan federal court has been asked to formally terminate the Fair Fund following the complete distribution of settlement assets.
Approximately $449,000 remaining in the settlement account will be remitted directly to t…: Approximately $449,000 remaining in the settlement account will be remitted directly to the U.S. Treasury.
The 2018 settlement required Musk to step down as Tesla's chairman and submit certain soc…: The 2018 settlement required Musk to step down as Tesla's chairman and submit certain social media posts to company lawyers for review.
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In a filing in Manhattan federal court, the SEC asked a federal judge to close the Fair Fund, created after Musk settled the SEC case in 2018 charging him with securities fraud for posting on August 7, 2018, that he had "funding secured" to potentially take Tesla private.
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His posts on Twitter that day caused Tesla's shares and trading volume to spike, with the shares closing more than 6% higher than when he began posting. They later fell after it became clear Musk had not lined up financing.
Musk and Tesla each paid a $20 million civil fine, with sums designated for investor victims of the alleged fraud. Neither defendant admitted wrongdoing. Musk also agreed to let Tesla lawyers review some Twitter posts in advance, and give up his role as chairman.
The SEC said a claims administrator distributed $41.53 million, including interest and after deducting fees, to 3,350 eligible claimants.
Those claimants received 51.7% of their approved claims because their…
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