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.

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 Mr. Musk have agreed to pay $20 million each to the financial regulator under a settlement for a securities fraud lawsuit related to Mr. 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, Mr. Musk will also step down as the company's chairman but remain chief executive.

"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% to $280.03 in afternoon trading on Thursday.