Key facts
- A federal judge approved the SEC's settlement with Elon Musk concerning his purchase of Twitter shares.
- The settlement requires a $1.5 million civil fine to be paid by a trust in Musk's name.
- Musk did not admit wrongdoing and will not be required to repay $150 million he allegedly saved.
- The SEC had accused Musk of delaying the disclosure of his initial 5% stake in Twitter in 2022.
- Judge Sparkle Sooknanan expressed significant misgivings about the settlement but approved it.
- The case is separate from a previous civil lawsuit where Musk was found liable for defrauding Twitter shareholders.
A federal judge has approved a settlement between Elon Musk and the U.S. Securities and Exchange Commission (SEC) concerning Musk's delayed disclosure of his initial purchases of Twitter shares in 2022. U.S. District Judge Sparkle Sooknanan stated she had "significant misgivings" about the accord but found her role limited in assessing its fairness and reasonableness.
Under the settlement, a trust in Musk's name will pay a $1.5 million civil fine. Musk did not admit wrongdoing and will not be required to repay the approximately $150 million he allegedly saved by buying shares at artificially low prices due to the delayed filing. The SEC had argued that Musk's 11-day delay in revealing his initial 5% stake allowed him to acquire more shares before the market reacted.
Musk's legal team stated that he has been cleared of all issues related to the late filing. Musk himself had previously called the delay inadvertent and accused the SEC of violating his free speech rights. The settlement concludes a protracted period of legal disputes between Musk and the SEC, which began in 2018 with charges of securities fraud related to his tweets about taking Tesla private.
Legal experts noted that while the $1.5 million penalty is modest for Musk, it serves as a market statement that rules apply to everyone. The case is separate from a prior civil lawsuit where a jury found Musk liable for defrauding Twitter shareholders in connection with his eventual buyout of the company.