On Wednesday, a federal judge approved the U.S. Securities and Exchange Commission’s settlement with Elon Musk over his delayed disclosure of Twitter stock purchases while questioning whether the regulator treated the billionaire too favorably.
Musk’s Twitter Disclosure Delay Sparks SEC Settlement
A federal judge approved the SEC’s $1.5 million settlement with Musk over allegations that he violated securities laws by delaying disclosure of his 2022 Twitter stock purchases, Reuters reported.
The SEC alleged Musk delayed disclosing his growing stake by 11 days during March and April 2022, allowing him to continue buying Twitter shares before the market learned of his position.
According to the regulator, the delay enabled Musk to save approximately $150 million before completing his $44 billion acquisition of Twitter later that year, which he subsequently rebranded as X.
Under the settlement, a trust in Musk’s name will pay a $1.5 million civil penalty to resolve the SEC’s claims. Musk did not admit wrongdoing and has previously maintained that the delayed disclosure was inadvertent.
Judge Raises Questions Over SEC’s Handling Of Musk Case
Although U.S. District Judge Sparkle Sooknanan approved the agreement, she said she did so with “significant misgivings,” citing several “red flags” surrounding the settlement.
“A court presented with a consent judgment is not a rubber stamp. But neither is it an ombudsman,” Sooknanan wrote, explaining that courts have a limited role in reviewing settlements.
The judge questioned why the SEC abandoned its effort to seek disgorgement — the return of allegedly ill-gotten gains — despite claiming Musk benefited by roughly $150 million.
She also questioned why the settlement was reached with Musk’s trust instead of Musk personally, saying it allowed him to claim he had been cleared of wrongdoing publicly.
Sooknanan further wrote, “The court is left to wonder whether the SEC will afford other alleged securities-law violators such solicitude.”
Musk is the CEO of Tesla Inc. (NASDAQ:TSLA) and Space Exploration Technologies Corp (NASDAQ:SPCX). He currently has a net worth of $927.2 billion, according to Forbes.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy: Frederic Legrand – COMEO on Shutterstock.com
Recent Comments