Tesla investors to get $12,000 each as compensation for Musk's tweet

The judge said he would sign off on the plan on September 1 if there are no objections from Tesla or its CEO Mr Musk, the world’s richest person. Picture: Britta Pederson/Getty

A group of Tesla investors stands to recover an average of about $12,000 (€11,110) a head for losses they incurred from Elon Musk’s famous 2018 tweet that he had “funding secured” to take the carmaker private at $420 a share — and then didn’t.

The US Securities and Exchange Commission (SEC) aims to pay the investors the $40m 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 $80m the SEC reckons they lost from the stock’s gyrations after the tweet — and a mere sliver of the $12bn 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. 

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 he would sign off on the plan on September 1 if there are no objections from Tesla or Mr Musk, the world’s richest person. 

What accounts for the huge gap in estimated losses between the $80m and the $12bn is not entirely clear, but the expert’s number applied to losses by all Tesla investors over 10 days after 2018 tweet.

The investors in the class action case lost at trial in February, when the jury took just two hours to clear Mr 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.

In the 2018 SEC settlement, Mr Musk and Tesla each agreed to pay $20m in civil penalties, and that the CEO’s company-related Twitter posts would be screened by a company lawyer. 

• Bloomberg