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Tesla investors to get $12K for Elon Musk’s false tweet

August 24, 2023
in Business
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Tesla investors to get K for Elon Musk’s false tweet
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A group of Tesla investors stands to recover an average of about $12,000 a head for losses they incurred from Elon Musk’s famous 2018 tweet that he had “funding secured” to take the car maker private at $420 a share — and then didn’t.

The US Securities and Exchange Commission aims to pay the investors the $40 million plus interest that Tesla’s chief executive officer and the company agreed to as civil penalties to settle a lawsuit by the regulator. That’s just over half the $80 million the SEC reckons they lost from the stock’s gyrations after the tweet — and a mere sliver of the $12 billion in losses an expert witness for a class of Tesla investors calculated earlier this year in a separate class action trial.

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

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

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

What accounts for the huge gap in estimated losses between the $80 million and the $12 billion? It’s not entirely clear, but the expert’s number applied to losses by all Tesla investors over 10 days after the Aug. 7, 2018, tweet. The SEC’s number covers just over 27 hours after the tweet, excludes options and derivative trades and applies only to Tesla common stock. And not every eligible investor filed a claim. 

The investors in the class action case lost at trial in February, when the jury took just two hours to clear Musk of their claim that he defrauded them with the tweet. The case was one of the few corporate securities fraud claims to go to trial. The vast majority are thrown out or settled. 

The investors are appealing.


Credit: Source link

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