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Shares of Tesla closed down 5.1 per cent at $876.35 in New York,amid a broader market decline that saw the Nasdaq stock market down 2.1 per cent.

Press officials at the SEC didn’t immediately respond to a request for comment on the letter.

Rust Consulting,the firm appointed in May to administer distributions from the fund,hasn’t filed required accounting statements,US District Judge Alison Nathan said in the December order. The SEC reached settlements with Musk and Tesla in September 2018 aftersuing the billionaire over his tweeted claims weeks earlier that he had the funding and investor support to buy out stockholders at $US420 a share.

‘Despite the SEC’s inattention and dereliction when it comes to paying Tesla’s shareholders,it has been more than energetic in going after Mr Musk and Tesla.’
Lawyer Alex Spiro

Rust told Nathan last month that it had received a draft distribution plan from the SEC and that it’s awaiting approval of the plan by Nathan and transfer of the funds into an escrow account.

The SEC alleged the tweets were false,and while Musk and Tesla didn’t admit wrongdoing in the accord,the agency set up a “fair fund,” with $US20 million each from Musk and Tesla,to repay investors Musk’s statements hurt.

In the letter,Spiro asked Nathan for a hearing “to address why the SEC has failed to distribute these funds to shareholders but has chosen to spend its energy and resources investigating Mr Musk’s and Tesla’s compliance with the consent decree by issuing subpoenas unilaterally,without court approval.”

“Despite the SEC’s inattention and dereliction when it comes to paying Tesla’s shareholders,it has been more than energetic in going after Mr Musk and Tesla,largely to police Mr Musk’s public pronouncements via Twitter,” he said.

The settlements haven’t resolved conflict between the SEC and Musk over his company-related tweets. In 2019,the agency asked Nathan to find that thebillionaire violated them by tweeting about the company’s outlook for producing cars.Both sides agreed in April of that year to add provisions limiting the topics Musk can post about without first running them by a company lawyer.

Then,in November,the SEC subpoenaed Tesla for information about its governance processes and compliance with the 2018 settlements after Musk took a Twitter poll asking whether he should sell 10 per cent of his Tesla stake. The carmaker’s shares plunged 16 per cent in the following two trading days.

The cases are US Securities and Exchange Commission v Musk,18-cv-08865;US Securities and Exchange Commission v Tesla,18-cv-08947,U.S. District Court,Southern District of New York (Manhattan).

Bloomberg

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