Government To Pay Certain People Who Bought Tesla Stock

The US Securities and Exchange Commission (SEC) will reimburse certain people who bought Tesla stock immediately after CEO Elon Musk tweeted in 2018 that he would take the company private, according to a Friday press release from the agency.

Musk tweeted on August 7, 2018, that he had “funding secured” to take the electric automaker private at a rate of $420 per share. In the hours after the announcement, Tesla share prices surged more than 10% — even though Tesla later said that a final decision had not been made.

Federal officials filed two civil actions in September 2018 over the “materially false and misleading statements,” according to the SEC. After Musk and Tesla paid a total of $40 million in civil penalties to the agency, the SEC created a “Fair Fund” in 2020 to distribute the money to people who bought shares between the time of Musk’s tweet on August 7, 2018, and market close the following day.

“Tesla failed to implement adequate procedures or controls for determining whether to disclose the information Musk disseminated on Twitter in its filings,” the SEC said in reference to its civil actions.

Musk’s legal team has contended that the SEC is trying to discourage the billionaire’s free speech by subpoenaing Tesla regarding his social media use. Beyond Tesla, the SEC is currently investigating Musk for allegedly failing to properly report his stake in Twitter within 10 days of meeting the relevant ownership threshold.

Musk’s counsel wrote in February that Tesla thought settling the charges would conclude the SEC’s “harassment” of Musk, asserting that “the SEC has broken its promises” and is now “weaponizing the consent decree by using it to try to muzzle and harass” Musk and Tesla.

“The SEC’s outsized efforts seem calculated to chill his exercise of First Amendment rights rather than to enforce generally applicable laws in evenhanded fashion,” the filing explained.

The SEC, however, believes that its conduct was consistent with its management of the settlement. “The commission’s enforcement staff have … sought to meet and confer with counsel for Tesla and Mr. Musk to address any concerns regarding Tesla and Mr. Musk’s compliance,” senior SEC official Steven Buchholz wrote in a February letter to a Manhattan federal judge.

A Thursday email from Musk to Tesla executives revealed that he wants to cut 10% of jobs at the company due to a “super bad feeling” about the economy. Musk instructed Tesla to “pause all hiring worldwide.”

Musk has also contended that a recession would “actually be a good thing” since “it has been raining money on fools for too long.” He added that the “stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard” — prompting a “rude awakening.”

The layoff message was sent two days after Musk said in another email that “remote work is no longer” acceptable at Tesla.

“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he noted, adding that employees must work from “a main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office in another state.”

A Twitter commenter asked for a response from people who believe “coming into work is an antiquated concept.” Musk replied: “They should pretend to work somewhere else.”

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