Judge approves SEC settlement over Musk's delayed Twitter stock disclosures
What's the story
A US District Judge has approved the Securities and Exchange Commission (SEC)'s settlement with Elon Musk over his delayed disclosure of Twitter share purchases. The ruling comes after a trust associated with Musk agreed to pay a $1.5 million civil penalty to resolve SEC claims of violating federal securities laws during his acquisition of Twitter shares in 2022. However, Judge Sparkle Sooknanan expressed "significant misgivings" about the deal, raising concerns about potential preferential treatment for the billionaire.
Disgorgement debate
Case stems from Musk's purchase of Twitter shares
The settlement ends the SEC's lawsuit against Musk, but Sooknanan was reluctant to approve it. She emphasized that federal courts cannot rewrite settlements just because they seem unsatisfactory. The case stems from Musk's purchase of Twitter shares in early 2022, months before he acquired the social media company. The SEC alleged Musk delayed disclosing his ownership had crossed the 5% threshold by 11 days beyond regulatory deadline, enabling him to buy shares at lower prices and save about $150 million.
Filing controversy
Musk maintains late filing was an inadvertent mistake
Musk has maintained that the late filing was an inadvertent mistake rather than an intentional attempt to evade disclosure rules. The lawsuit was filed in January 2025, just days before Donald Trump returned to the White House. In May, both sides agreed to settle the case without Musk admitting or denying the allegations. Under the agreement, a trust that manages much of Musk's wealth, not Musk personally, will pay a $1.5 million penalty.
Disgorgement debate
Judge questioned why SEC dropped earlier demand for disgorgement
The settlement also raised concerns for Sooknanan as it was structured through Musk's trust, giving him a chance to publicly claim he had been cleared of wrongdoing. She questioned why the SEC had dropped its earlier demand for disgorgement and accepted a relatively modest financial penalty instead. The judge further noted that SEC lawyers appearing before her earlier this year seemed unaware that settlement negotiations had already been taking place, prompting questions about how the agreement had been reached.
SEC's defense
SEC defends agreement, says $1.5 million penalty was largest ever
The SEC has defended the agreement, telling the court there was no collusion in the negotiations. It argued that the $1.5 million penalty was the largest ever obtained in a case involving delayed beneficial ownership disclosures and said an injunction included in the settlement would continue to bind Musk when acting through his trust. The ruling also comes against the backdrop of Musk's close ties with Trump administration.