Tesla investors will get about $12,000 apiece in Musk’s deal with the SEC

Tesla investors will get about $12,000 apiece in Musk's deal with the SEC

(Bloomberg) — A group of Tesla Inc. investors is gearing up. To recoup an average of about $12,000 per person for losses incurred from Elon Musk’s famous 2018 tweet in which he said he had secured “financing secured” to take the automaker private at $420 a share — and then didn’t.

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The SEC aims to pay investors $40 million plus interest, which the Tesla CEO and company agreed to as civil penalties to settle a lawsuit by the regulator. That’s just over half of the $80 million the SEC believes they lost due to the stock’s post-tweet volatility — and just a fraction of the $12 billion in losses an expert witness calculated for a class of Tesla investors earlier this year at a trial. separate group.

The SEC asked a judge for final approval of the plan in a court filing Wednesday night.

A total of 3,350 claims will be paid out of the fund created from the settlement if the plan is approved, according to the filing. That works out to just under $12,400 for the average investor. On Thursday, the judge said he would sign the plan on Sept. 1 if there were no objections from either Tesla or Musk, the world’s richest person.

What explains the huge gap in estimated losses between $80 million and $12 billion? It’s not entirely clear, but the expert’s figure applies to losses incurred by all Tesla investors over the 10 days after the Aug. 7, 2018 tweet. The SEC figure covers just over 27 hours after the tweet, excludes options and derivatives trades and applies only to Tesla shares. regular. Not every qualified investor has filed a claim.

Investors in that class-action lawsuit lost to trial in February, when it took a jury just two hours to acquit Musk of their claim that he defrauded them with his tweet. This case was one of the few corporate securities fraud cases to go to trial. The vast majority of them have either been expelled or settled.

Investors appeal.

The regulatory case is SEC v. Musk, 18-cv-08865, US District Court, Southern District of New York (Manhattan).

Read more: Elon ‘Teflon’ wins again after jury dismisses Twitter fraud claims

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