Tesla Shareholders Stand to Reclaim $12,000 Each Over Musk's 'Funding Secured' Incident

In a potentially significant turn of events, a group of Tesla shareholders may soon recoup an average of $12,000 each in losses incurred during the CEO Elon Musk's infamous "funding secured" debacle of 2018.

At the time, Musk took to Twitter (formerly known as X) to announce that he had secured funding to take Tesla private. This tweet sent shockwaves through the TSLA stock, leading to a surge in volatility and, subsequently, legal action from the Securities and Exchange Commission (SEC).

As part of the settlement reached with the SEC, both Musk and Tesla agreed to pay a hefty $20 million fine each. Additionally, Musk was compelled to step down from his role as chairman of Tesla's Board of Directors. Musk later expressed during a TED Conference in the past year that he felt "coerced into conceding to the SEC unlawfully."

"I was compelled to admit that I had deceived in order to protect Tesla's survival, and that was my sole motivation" Musk stated.

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

— Elon Musk (@elonmusk) August 7, 2018

The SEC is now actively seeking to reimburse TSLA investors for the $40 million, plus interest, agreed upon by Musk and Tesla as civil penalties. According to a Bloomberg News report, the SEC has formally requested a judge's final approval for this plan in a recent filing.

Should the plan receive the judge's nod, a total of 3,350 claims will be paid out from the fund established through Musk's settlement. This would translate to an average payout of just under $12,400 per investor. The judge has indicated that he is inclined to endorse the plan on September 1, barring any objections from Elon Musk or Tesla.

Considering Musk's recent remarks regarding the case, it wouldn't be surprising if either the CEO or Tesla raises objections to the SEC's proposed plan.

"Thank goodness, the wisdom of the people has prevailed!
I am deeply appreciative of the jury’s unanimous finding of innocence in the Tesla 420 take-private case." 

— Elon Musk (@elonmusk) February 3, 2023

Moreover, the SEC has made its own estimate, suggesting that Tesla shareholders suffered approximately $80 million in losses due to the volatility in TSLA stock following Musk's tweet in 2018. However, earlier this year, an expert witness for a group of Tesla investors put forth a staggering estimate of $12 billion in losses. This figure seems to be based on the losses incurred by all TSLA shareholders over the ten days following Musk's August 7, 2018 tweet.

It's important to note that the SEC's estimate of $80 million only covers a period of slightly over 27 hours after Musk's tweet, and it excludes options and derivative trades, focusing solely on common TSLA stock. Additionally, not all eligible investors filed claims, as reported by Bloomberg.

While the investors involved in the TSLA class action lawsuit did not secure a victory in February, as the jury cleared Musk of the accusation of defrauding investors through his 2018 tweet, they are currently pursuing an appeal.

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