The Securities and Exchange Commission has unveiled a plan to distribute more than $40 million to Tesla shareholders in what one source said was a victory for Elon Musk, who pushed for it in federal court.
The payout is part of a long-running saga about Musk and his tweets, most notably in 2018, that said he arranged the financing to sell Tesla at $420 a share. The Securities and Exchange Commission hit him in the knuckles for what it called a fraud; Musk and the regulator reached an agreement that resulted in a $20 million fine for Tesla and a $20 million fine for Musk personally, which will be distributed to shareholders.
On Tuesday, Musk first asked a federal judge to get out of the SEC settlement — a so-called “consent order” that requires a Tesla lawyer to review his tweets before posting. In February, Musk said that the SEC had not honored its end of the deal and had robbed the affected shareholders of their $40 million.
Judge Alison Nathan for the Southern District of New York on Tuesday ordered the U.S. Securities and Exchange Commission (SEC) to respond to Musk’s request to terminate the consent order by March 22, court documents say. Later that day, the SEC filed a distribution plan for payments to Tesla shareholders.
Judge Nathan also ruled that the Nov. 29 subpoena filed by the SEC against Tesla to verify compliance with the September 2018 agreement between the company and the regulator exceeded the SEC’s investigative authority and was issued in bad faith because it failed to pass the review. court, according to court records.
Judge Alison Nathan for the Southern District of New York on Tuesday ordered the Securities and Exchange Commission to respond to Musk’s request to terminate the consent order by March 22. Getty Images/Drew Angerer
The SEC wants to prove that Musk sent the tweets without the approval of Tesla’s lawyers and therefore violated the consent decree, people familiar with the matter said.
Judge Nathan will soon rule on whether both sides are playing by the rules – or whether the SEC has the power to investigate Musk’s behavior and possibly impose tougher penalties.
In a sworn statement, Musk said he was “forced” to sign an SEC truce that settled the situation with his infamous August 7, 2018 tweet in which he claimed he was “funded” to privatize Tesla at $420 apiece. . share.