Musk settles SEC case over Twitter stake for $1.5M
What's the story
Elon Musk has settled a civil lawsuit with the US Securities and Exchange Commission (SEC) over his delayed disclosure of initial purchases in Twitter, now known as X. The settlement, which was disclosed on Monday in a federal court in Washington D.C., sees a trust in Musk's name pay a $1.5 million civil fine. However, it's important to note that Musk did not admit any wrongdoing through this agreement.
Resolution details
Settlement ends long legal battle
The settlement puts an end to a long-standing dispute between Musk and the SEC. The case stemmed from Musk's alleged failure to promptly disclose his initial purchases of Twitter in 2022. The SEC had accused him of using "gamesmanship" to delay its investigation by repeatedly evading the regulator's subpoena. In response, Musk had accused then-SEC chair Gary Gensler of "harassment."
Case background
SEC's allegations against Musk
The SEC alleged that Musk's 11-day delay in disclosing his initial 5% Twitter stake in late March and early April 2022 allowed him to buy over $500 million of shares at artificially low prices. This was before he finally revealed a 9.2% stake. The regulator argued that this delay saved Musk over $150 million at the expense of Twitter shareholders. However, Musk called the delay inadvertent and accused the SEC of violating his free speech rights by targeting him.
Final steps
Settlement pending approval by judge
The settlement now awaits approval by US District Judge Sparkle Sooknanan, who had earlier rejected Musk's bid to dismiss the case. The penalty is the largest in SEC history for this type of violation. It comes as a significant development after more than seven years of contentious battles between Musk and the regulator, which began in September 2018 when he was charged with securities fraud for tweeting that he had "secured" funding to potentially take Tesla private.