Judge tells Tesla, SEC to justify lawsuit deal before settling

(Reuters) – A New York district court judge has asked Tesla Inc Chief Executive Officer Elon Musk and U.S. Securities and Exchange Commission to provide a joint statement by Oct. 11 before approving the recent settlement.

FILE PHOTO: Tesla Chief Executive Elon Musk stands on the podium as he attends a forum on startups in Hong Kong, China January 26, 2016. REUTERS/Bobby Yip/File Photo

Judge Alison Nathan said it was a regular practice at the Southern District of New York Court to have the parties submit a joint letter explaining why the court should approve a proposed consent judgment.

Tesla and Musk have agreed to pay $20 million each to the financial regulator under a settlement for a securities fraud lawsuit related to Musk’s Aug. 7 tweet about taking the electric car maker private, in which he said he had funding “secured”. As part of the settlement, Musk will also step down as the company’s chairman but remain chief executive.

FILE PHOTO: A newly installed car charger at a Tesla Super Charging station is shown in Carlsbad, California, U.S. September 14, 2018. REUTERS/Mike Blake

“The Court has a duty to ensure the proposed consent judgment is “fair and reasonable”, Judge Nathan wrote in the order, numbered 18-cv-08865-AJN.

Tesla did not immediately respond to request for comment.

Shares of the company fell 5 percent to $280.03 in afternoon trading on Thursday.

(This version of the story has been refiled to add dropped words in third paragraph)

Reporting by Sonam Rai in Bengaluru; editing by Patrick Graham

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