ALBAWABA – Elon Musk settled with the U.S. Securities and Exchange Commission for a far lower amount after a U.S. federal judge approved a deal to settle claims he failed to disclose his purchases of Twitter shares in time under securities law.
The settlement, reportedly worth $1.5 million, concerns Elon Musk's 2022 purchase of a substantial share in Twitter before he completed his $44 billion takeover of the social media giant, now called X. The SEC said Musk took 21 days to report that he had crossed the 5% ownership threshold, despite rules requiring such reports within 10 days.
The regulator said the late declaration allowed Musk to purchase Twitter shares at lower market prices and led to him growing his holding to 9.2% before the investment was announced. The SEC’s first petition demanded civil penalties and said Musk’s delay cost him more than $150 million he could have paid, potentially harming other investors.
The SEC settled the matter for a fraction of what it originally sought, notwithstanding the charges. The agency’s current leadership decided to make the deal rather than face a lengthy judicial fight.
U.S. District Judge Sparkle L. Sooknanan signed off on the settlement, but said she had “serious concerns” about the accord. In her opinion, the judge said it wasn’t the court’s job to criticize the SEC’s enforcement decisions, only to determine if the settlement fulfilled the minimum legal standards of justice and reasonableness.
The verdict concludes one of the protracted legal battles stemming from Musk’s $44 billion purchase of Twitter but also shines a fresh light on the government’s scrutiny of large corporate deals and disclosure rules in the U.S. financial markets.
