The SEC is finally ready to pay out $40 million to Tesla shareholders, after Elon Musk's lawyers accused the regulator of breaking its promises

• The SEC plans to distribute $41.2 million to Tesla shareholders, from a 2018 settlement with Elon Musk and the company.
• Musk's lawyers said the SEC broke its promises in delaying the payout, from fines on Tesla and its CEO.

The Securities and Exchange Commission is finally ready to distribute the $40 million it fined Elon Musk and Tesla to the electric-car maker's shareholders.

The regulator filed a request to court late Tuesday asking for permission to hand out the millions, according to a Reuters report.

It includes paying Tesla investors who lost money on the stock in the days after Musk made a series of tweets.

—Elon Musk (@elonmusk) August 7, 2018

In 2018, the SEC filed suit accusing Musk of misleading investors when he tweeted that he was "considering taking Tesla private at $420," and then said, "Funding secured."

The original cases refer to Elon Musk's misleading Tweets about taking Tesla private in August of 2018 as well as the failure of Tesla to properly implement controls of procedures to assess the information its CEO shared on Twitter.

It settled its cases against Musk and Tesla in 2018, with each agreeing to pay $20 million in fines. The proceeds have since grown to $41.2 million due to interest.

Musk and his lawyers have been pressing the SEC to distribute the money. Last month, they said the commission had "broken its promises" in taking its time to make the payout.

On Tuesday, Musk's lawyers asked a New York district judge to end another part of the settlement, a "consent decree" that ordered the CEO to get clearance from Tesla lawyers before making any public statements, including on Twitter.

They argued the SEC had "weaponized" the decree in order to harass and try to muzzle the billionaire CEO, via investigations of his conduct.

Musk has claimed he was forced into signing the agreement, and he has accused the SEC has a "vendetta" against him. He has said its actions could have jeopardized Tesla's finances.

On Tuesday, US District Judge Alison Nathan ordered the SEC to respond to Musk's petition to end the consent decree by March 22. The commission then filed its distribution plan in night court.

The judge must decide whether to approve the payout proposal before the SEC can go ahead with it.