Elon Musk and the U.S. Securities and Exchange Commission (SEC) have vigorously defended their settlement concerning Musk’s purchase of Twitter shares, following a federal judge’s assertion that the accord raised “red flags.” The settlement mandates a trust in Musk’s name to pay a $1.5 million civil penalty. This resolution addresses SEC claims that Musk took 11 days too long in March and April 2022 to disclose his significant acquisition of Twitter shares, an oversight Musk maintained was inadvertent. He ultimately paid $44 billion for Twitter in October 2022, rebranding it as X.
At a May 13 hearing, U.S. District Judge Sparkle Sooknanan questioned several aspects of the agreement, stating she could not simply “rubber stamp” it. Her concerns included why the SEC opted to fine the trust rather than Musk directly, and why the penalty represented only 1% of his alleged $150 million in ill-gotten gains. Judge Sooknanan also raised the crucial question of whether the settlement served the public interest and was free from any taint of collusion or corruption. Both Musk and the SEC firmly countered these points, asserting the settlement was the result of “arm’s-length negotiations” and did not reflect “improper collusion.”
In Monday filings, both parties elaborated on their positions. Musk described the agreement as a “fair, adequate and reasonable resolution” where both sides made concessions, arguing he could have won at trial, including against claims of political motivation. The SEC added that the accord permits Musk to publicly deny its accusations, aligning with a recent policy shift. The regulator also highlighted the $1.5 million penalty as the largest of its type, and stated that settling with the trust mirrored its practice in recent cases. Musk is the head of several ventures, notably electric vehicle manufacturer Tesla and aerospace company SpaceX. He also owns the social media platform X, formerly Twitter, which he acquired in October 2022. He contrasted his penalty with the $500,000 imposed on Carl Icahn for “far more serious” conduct.
