The U.S. Securities and Exchange Commission told a Manhattan federal court on Tuesday that distributions from a $40 million Fair Fund, established with civil fines paid by Elon Musk and Tesla, have been completed and asked a judge to close the fund.
The Fair Fund stems from Musk's 2018 settlement with the SEC, which charged him with securities fraud for posting on August 7, 2018, that he had "funding secured" to consider taking Tesla private. The regulator said those Twitter posts produced a sharp rise in Tesla's share price and trading volume, with the shares closing more than 6% higher than when Musk started posting that day, and that prices later fell after it became apparent that financing had not been arranged.
Under the 2018 settlement, Musk and Tesla each paid $20 million in civil fines with the money designated for investors who suffered losses linked to the alleged misconduct. Neither Musk nor Tesla admitted wrongdoing as part of that settlement. As additional terms, Musk agreed to allow Tesla lawyers to review certain Twitter posts in advance and to relinquish his role as chairman.
In its court filing, the SEC said a claims administrator had distributed $41.53 million to 3,350 eligible claimants. That distributed amount includes accrued interest and reflects deductions for fees. Because the approved claims exceeded the fund's resources, recipients received 51.7% of their approved claim amounts. Another 3,046 submitted claims were rejected.
The SEC noted that roughly $449,000 remains in the Fair Fund and will be transferred to the U.S. Treasury. "Distribution of the Fair Fund is now complete," the agency said in the filing.
The SEC emphasized that this matter is distinct from a separate enforcement action related to Musk's early purchases of Twitter stock in March and April 2022. In that separate case, the regulator alleged Musk delayed disclosure of those purchases by 11 days. Musk resolved that matter by having a trust in his name pay $1.5 million, again without admitting wrongdoing. A federal judge approved the settlement in July, while expressing "significant misgivings" about whether the SEC's resolution was sufficiently stringent.
The filing also referenced non-SEC facts included in the public record regarding Musk's relationship to the U.S. government and his corporate activities: Musk served as an adviser to Republican U.S. President Donald Trump; he acquired Twitter in 2022, subsequently renamed the platform X, and later integrated the social media operation into his rocket and satellite firm SpaceX.
The SEC's request to close the Fair Fund reflects the agency's conclusion that the money collected and distributed on account of the 2018 settlement has been allocated to eligible investors, fees have been paid, and the remaining balance will be remitted to the Treasury, concluding the administrator's role in this enforcement-related restitution program.