Tesla founder Elon Musk and his company will be paying back more than 3,000 investors approximately $12,397 each as a result of a lawsuit related to Musk’s infamous “funding secured” tweet in 2018. The Securities and Exchange Commission (SEC) filed a complaint accusing Musk of defrauding investors by claiming that he was prepared to take the electric vehicle maker private at $420 per share. The plan to reimburse 3,350 claimants has been submitted to the court for final approval.
To settle the lawsuit, Musk and Tesla agreed to pay civil penalties of $40 million plus interest. Additionally, a “Fair Fund” was established, with the funds being held in an interest-bearing account at the U.S. Treasury’s Bureau of Fiscal Services. The SEC estimated that investors suffered losses of approximately $80 million as a result of Musk’s false and misleading statements.
While the SEC’s lawsuit addressed losses of $80 million, some experts, such as Michael Hartzmark from Forensic Economics, estimated that Tesla investors actually lost $12 billion over a 10-day period following the tweet. However, these damages were not part of the settlement with the SEC.
The judge overseeing the case is expected to approve the payout plan on September 1, as long as neither Tesla nor Musk raise any objections. Since the controversial tweet, Tesla’s stock has experienced a tremendous surge, with share prices increasing by 886%. As a result, Elon Musk’s net worth climbed to $215 billion as of Friday, making him the top-ranked individual on Bloomberg’s Billionaires Index.
