The U.S. Securities and Exchange Commission has asked a federal judge in Manhattan to shut down the settlement fund created after Elon Musk and Tesla resolved a 2018 securities-fraud case, saying the money has already been distributed to thousands of harmed investors. The so-called Fair Fund was built from $40 million in civil fines, with Musk and Tesla each paying $20 million. A remaining balance of roughly $449,000 is expected to be swept into the U.S. Treasury.
According to Reuters via Investing.com, the SEC told the court that the claims administrator distributed $41.53 million, including interest and after fees, to 3,350 eligible claimants. Those claimants ultimately received just 51.7% of their approved claims because total losses exceeded the size of the fund. Another 3,046 claims were rejected outright, the SEC said, as the agency now looks to formally close the books on the case.
The SEC's own case page for SEC v. Elon Musk and SEC v. Tesla, Inc. shows the court granted the Commission's motion on September 1, 2023, entering an order to disburse $41,532,229.44 to eligible investors — the same total figure now cited in the agency's request to wind down the fund. A supplemental declaration filed with the court and hosted by the SEC lists the remaining administrative steps as remitting leftover funds to the Treasury, terminating the Fair Fund, and discharging the distribution agent.
How the 2018 Case Began
The underlying case traces back to August 7, 2018, when Musk posted on Twitter that he had “funding secured” to potentially take Tesla private. The posts caused Tesla's shares and trading volume to spike that day, with shares closing more than 6% higher than before Musk began posting. The stock later fell once it became clear Musk had not actually lined up the financing, per the same Reuters account.
The SEC charged Musk with securities fraud over the funding-secured claims, and the case was settled later that year. As part of the deal, Musk and Tesla each paid the $20 million civil fine without admitting wrongdoing. Musk also agreed to give up his role as Tesla chairman and to have company lawyers review some of his future Twitter posts in advance, the outlet's report notes.
A Separate, More Recent Settlement
The Fair Fund case is distinct from a separate SEC matter involving Musk's disclosures about his early purchases of Twitter shares. In that case, the SEC accused Musk of waiting 11 days too long, in March and April 2022, to disclose his early stock buys before he went on to purchase Twitter later that year. Twitter was subsequently renamed X, and Musk folded the platform into his rocket and satellite company, SpaceX.
Musk settled that separate case through a trust in his name paying $1.5 million, again without admitting wrongdoing. A federal judge approved that settlement in July, but did so while expressing what the report describes as significant misgivings over whether the SEC had let Musk off too easily. Musk has also served as a former adviser to Republican U.S. President Donald Trump, according to the same account.
For now, the fate of the original Fair Fund rests with the Manhattan federal court, which has not yet ruled on the SEC's latest request to formally close it out.
