In the settlement that was announced over the weekend, Tesla and Musk instead agreed to pay $20 million each to the regulator while the billionaire - also a large Tesla shareholder - would step down as chairman but continue as CEO.
U.S. District Judge Alison Nathan in Manhattan said her regular practice is to have parties submit a joint letter, in this case by October 11, to show why their settlement was fair and reasonable and would not hurt the public interest.
Ever since August, Elon Musk has been riding a rollercoaster he himself set in motion.
"That was quick", said Peter Henning at The New York Times. Tesla shorts were up more than $1.2 billion after the SEC filed its lawsuit against Musk, according to S3 Partners data from September 28.
Musk, who has long railed against Tesla's short sellers - investors who bet against the company - called the SEC the "Shortseller Enrichment Commission".
SEC has not taken any action on the tweet so far and we have not seen any statement from Tesla as of now.
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Judge Alison Nathan said the court needs to see justification that the settlement is "fair and reasonable".
The two parties reached the settlement just two days after the SEC issued the charges, which had sent Tesla shares plunging.
We all know the story by now: Musk suggested on Twitter that Saudi Arabia would be taking Tesla private, sending shares soaring, but changed his mind shortly after, resulting in the SEC filing a lawsuit against Musk saying that he had been manipulating shares.
But Musk had not secured the funding, the SEC said. Per the terms of the settlement: "Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk's communications".
One such judge was Jed Rakoff, a colleague of Nathan's who objected to the SEC policy of letting some corporate defendants settle without admitting or denying wrongdoing, as Musk did.
But, after seeing the consequences of it, I think he must be careful about his tweets.
Tesla said in its 3Q vehicle safety report that "we've registered one accident or crash-like event for every 3.34 million miles driven in which drivers had Autopilot engaged".
However, Musk had been acting erratically for months even before the take-private tweet and the subsequent interviews with the Times and Rogan.