A New York district court judge has asked Tesla Inc. CEO Elon Musk and the U.S. Securities and Exchange Commission to provide a joint statement by Oct. 11, explaining why their settlement should be approved.
U.S. District Judge Alison Nathan said it was a regular practice at the Southern District of New York Court to ask for a joint statement.
Shares of the company fell 4.4 percent to close on Thursday at $281.83.
Tesla and Musk have agreed to pay $20 million each to the regulator under a settlement for a securities fraud lawsuit related to Musk's Aug. 7 tweet about taking the electric carmaker 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 CEO.
The SEC charged Musk with misleading investors with the tweet, saying it had no basis in fact. Tesla was not charged with fraud. The settlement was announced on Sept. 29, two days after Musk was charged.
"The Court has a duty to ensure the proposed consent judgment is "fair and reasonable," Judge Nathan wrote in the order.
Nathan "may want to know why Tesla is paying a fine because the CEO doesn't know when to shut up," said Adam Pritchard, a University of Michigan law professor and former SEC lawyer.
The SEC and Tesla did not immediately respond to request for comment.
Some judges have complained about being viewed as rubber stamps for SEC settlements. Among them was Nathan's colleague Jed Rakoff, who had objected to the SEC's decades-old policy of letting some corporate defendants settle without admitting or denying wrongdoing, as Musk did.
But in 2014, the 2nd U.S. Circuit Court of Appeals overturned Rakoff's rejection of a $285 million settlement between the SEC and Citigroup Inc., saying he should have given "significant deference" to the regulator.
The 2nd Circuit has jurisdiction over Nathan's court, and Pritchard said the Citigroup decision likely foreshadows approval of Musk's settlement.
"I do not think there is any serious chance of the settlement being rejected, based on 2nd Circuit precedent," Pritchard added. "This is just a hoop to be jumped through."
In a separate matter, Tesla reported third-quarter vehicle safety statistics, registering one accident or crash-like event for every 3.34 million miles driven in which drivers had Autopilot engaged. Without Autopilot, such incidents occurred every 1.92 million miles, while a crash happened every 492,000 miles driven in the U.S., according to federal traffic-safety data, Tesla said.
Bloomberg contributed to this report.