Chicago Clearing

Blogs

Cryptic Tweet Leads to $40 Million Tesla Fair Fund
June 01, 2022

Case Name: Tesla Fair Fund

Settlement Fund: $40,000,000

Claim Filing Deadline: September 17, 2022

Class Period: 8/7/2018 -- 8/8/2018


It is one of the most specific class periods on record for a securities settlement: investors may participate in the Tesla Fair Fund if they purchased or acquired the company’s common stock, "between 12:48:16 PM EDT on August 7, 2018 and 4:00 PM EDT on August 8, 2018."

 

The end time is clear—4:00 Eastern is when the closing bell rings on the NASDAQ, where TSLA shares are traded. But what happened at precisely sixteen seconds after the forty-eighth minute of the noon hour on the seventh day of August, 2018?

 

As you may recall, the future owner (maybe) of Twitter was making cryptic comments on Twitter.

 

"Is Elon Musk serious?" is now a common question as the world watches his attempt to buy the social media company. But during the 48th minute of noon, 8/7/2018, investors were left to parse the meaning of, "Am considering taking Tesla private at $420. Funding secured."

 

Would he really pay $420 per share, which was a 20 percent premium at the time? Or was it because 420, when pronounced four-twenty, is slang for the supposedly optimum time of day to smoke marijuana?

 

The answer may be a little of both: Musk thought a 20% premium was fair, and the price was a sophomoric gag. As plaintiffs point out in a related class action, "Musk believed that 20% was a ‘standard premium’ in going-private transactions. Although the precise calculation equaled $419.49, Musk rounded the price up to $420 per share because he thought his girlfriend at the time, Claire Elise Boucher (also known as ‘Grimes’), would find it funny due to the significance of the number to marijuana users."

 

Over the next few days, Tesla investors went on a "Magic Carpet Ride," as the price went from $343 at open on August 7 to $379.59 at close, down to $370.34 at the close on August 8, and then $352.45 on August 9. (We reference Steppenwolf here because we do not know any Grimes songs.)


The Securities and Exchange Commission was not amused. The SEC's Enforcement Division began investigating immediately, and by September 27, 2018 had filed charges. Two days later the SEC announced a settlement requiring both Tesla and Musk to pay $20 million each, which three and a half years later comes in the form of this $40 million Fair Fund.

 

The class action based on the now-infamous Tweet is still pending in the Northern District of California, (3:18-cv-04865), and one of hundreds of unresolved cases which CCC is tracking.

Written By: Dennis OToole

I could go on and on, but bottom line, the fees being charged are much less than what I was spending in house to file and this is just one less thing I have to spend time trying to figure out how to complete on a consistent basis. Dealing with the CCC staff has been a very positive thing.

- National Bank

We were spending countless hours on class action claims before we signed on with CCC in January. Matt Murray and their technical team ensured our data transmission was seamless and secure. We found everyone at CCC to be professional, courteous, and accommodating.

- Savings Bank

Signing with CCC has made a huge difference. Before, it was horrible. We had to print thousands of pieces of paper, invite clients to come in and sit down with us to show them where to find the transactions, how to input them into the Proof of Claim forms. Now it's simple. It’s very nice to be able to tell our client, “You can shred that Proof of Claim form because CCC has it taken care of.

- Registered Investment Advisor

Your client reporting portal and customer service is the reason we chose Chicago Clearing. I send the data on an annual basis to CCC and they take it from there. My clients are protected (if there is a class action, it is getting filed), the Bank is protected (we are meeting our fiduciary obligation by filing the claims).

- Bank

Contact Us

404 South Wells St., Suite 600,
Chicago, IL 60607 – United States
Phone: (312) 204-6970
Email:
info@chicagoclearing.com

About Us

Chicago Clearing Corporation is the
industry leader in class-action services.

2024 © Chicago Clearing Corporation. All rights reserved. Terms and conditions