SEC has completed the distribution of the $40 million fine paid by Elon Musk and Tesla

The U.S. Securities and Exchange Commission (SEC) has announced that the distribution of funds from a $40 million fund, established on the basis of fines paid by Elon Musk and his electric vehicle company Tesla, has been completed. The agency asked the Manhattan federal court to close the so-called Fair Fund, which was created in 2018 as part of the first civil lawsuit filed against Musk by the regulator.

The case concerned Musk's August 7, 2018 statement on Twitter, in which he wrote that he had "funding secured" to take Tesla private. The posts caused a sharp rise in the company's stock price and trading volume — on that day, shares rose by more than 6% compared to the start of the trading day. Prices later fell when it became clear that Musk had not actually secured the funding.

The SEC sued Musk and Tesla on charges of securities fraud. To settle the dispute, both parties agreed to pay a $20 million civil penalty each. The funds were intended to compensate investors for their losses. Neither Musk nor Tesla admitted wrongdoing. As part of the settlement, Musk also agreed to have certain Twitter posts pre-approved by Tesla's lawyers and to step down from his position as the company's chairman.

Investors received 51.7% of the amount claimed

According to the SEC, after accounting for interest and deducting fees, the fund's administrator distributed a total of $41.53 million to 3,350 eligible claimants. Since investors' verified losses exceeded the fund's resources, each claimant received only 51.7% of their approved claim. An additional 3,046 claims were rejected.

The remaining approximately $449,000 in the fund will be transferred to the U.S. Treasury. "The distribution of fund assets is complete," the SEC's statement said.

This case is separate from the second legal dispute brought by the SEC against Musk, which concerned the delayed disclosure of information about Twitter share purchases. The regulator alleged that Musk disclosed information about his initial purchases of Twitter shares in March and April 2022 eleven days late.

The second case was resolved with a $1.5 million payment by a trust set up in Musk's name, though in this instance as well, Musk did not admit wrongdoing. A federal judge approved the settlement in July, though he expressed "significant doubts" about whether the SEC had been too lenient toward Musk.

Musk is a former adviser to U.S. Republican President Donald Trump. He acquired Twitter in 2022, renamed the platform X, and later merged it with his space and satellite company, SpaceX.