A federal judge has formally approved a $1.5 million settlement between Elon Musk and the U.S. Securities and Exchange Commission regarding disclosure violations during his acquisition of Twitter stock, despite expressing substantial reservations in her ruling.
The case stemmed from a lawsuit filed by the SEC in early 2025, alleging that Musk deliberately delayed filing a required disclosure with regulators for 11 days after his purchases of Twitter stock in March and April 2022 crossed the 5% reporting threshold. The SEC argued this delay allowed Musk to continue buying shares at lower prices before investors were aware, allegedly saving him approximately $150 million. Musk ultimately completed his $44 billion acquisition of Twitter in October 2022, later renaming it X.
Under the terms of the settlement, a trust in Musk's name will pay the $1.5 million civil penalty, with Musk himself not required to admit any wrongdoing. In her 12-page ruling, the judge raised several critical questions: why the SEC abandoned its request for Musk to disgorge the alleged $150 million in ill-gotten gains to compensate harmed investors, and why it chose to settle with Musk's trust rather than Musk personally. The judge noted the trust is a revocable trust with Musk as the sole trustee and beneficiary, effectively functioning as his personal investment account.
The judge wrote that while a court is not a rubber stamp, it is also not an ombudsman. She stated that whether the executive branch, through the SEC, has sufficiently held Mr. Musk accountable, like many other questions, is a matter for citizens to decide at the ballot box. She pointed out that while the $1.5 million fine is the highest for this type of violation, it is disproportionately small compared to the $150 million Musk is alleged to have saved.
The settlement was announced in May of this year, following the departure of the SEC's former head of enforcement in March after just six months in the role. The SEC has stated the agreement was not the result of collusion and that the $1.5 million penalty represents the highest fine for this category of violation.
Comments