Investors who lost money in Tesla Inc TSLA stock after CEO Elon Musk tweeted about taking the company private in 2018 are expected to recoup some of their losses in the coming weeks.
What To Know: The U.S. Securities and Exchange Commission (SEC) said in a new court filing that 3,350 eligible claimants are set to share in a payout of approximately $41.5 million related to a tweet in which Musk claimed he had "funding secured" to take Tesla private, per Reuters.
The "fair fund" was created when Musk settled an SEC lawsuit accusing the Tesla CEO of defrauding investors. As it turned out, Musk didn't secure funding to take the company private as he claimed, and thousands of investors lost money due to increased volatility in the stock.
The SEC settlement included $20 million in payments from both Musk and Tesla. The billionaire also agreed to step down as chairman of Tesla and allow a lawyer from the EV company to oversee some of his tweets.
Musk then appealed the ruling, arguing that the pre-approval requirement was an unlawful restraint on free speech, but in May, the 2nd U.S. Circuit Court of Appeals in Manhattan rejected the appeal.
The report indicates Musk is expected to appeal the court's decision to the U.S. Supreme Court, but the payout is anticipated to be finalized.
U.S. District Judge Lewis Liman said on Thursday he intends to approve the $41 million-plus payment to eligible claimants by Sept. 1 or shortly thereafter, as long as there are no objections.
Musk has come under regulatory scrutiny for his tweets multiple times over the last several years. Last October, the Tesla CEO purchased Twitter for $44 billion and rebranded the company to X.
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