A federal judge has opted not to swiftly approve the U.S. Securities and Exchange Commission's (SEC) $1.5 million settlement with Elon Musk regarding his delayed disclosure of stock purchases in Twitter. Judge Sparkle Sooknanan expressed the need for further information to assess the fairness of the settlement and the negotiation process behind it.
The SEC's lawsuit alleges that Musk failed to disclose his 5% stake in Twitter in a timely manner, which resulted in him saving approximately $150 million before he revealed a 9.2% stake in April 2022. Musk later acquired Twitter for $44 billion six months after this disclosure.
Judge's Requirements
Before moving forward with the settlement, Judge Sooknanan indicated that she must evaluate several key factors:
- Fairness to both parties involved
- Consistency with public interest
- Potential influence of improper collusion or corruption
Both parties have been ordered to appear in court on May 13 to propose a timeline for filing supporting briefs regarding the settlement.
Background of the Case
The SEC initiated the lawsuit against Musk on January 14, 2025, shortly before the departure of then-President Joe Biden. Musk, who has previously served as an adviser to former President Donald Trump, has claimed that the lawsuit is politically motivated, asserting that the delayed disclosure was unintentional.
Settlement Details
The proposed settlement does not require Musk to admit any wrongdoing or relinquish the funds he allegedly saved through his delayed disclosure. Settlement discussions between Musk and the SEC were revealed on March 17, coinciding with the abrupt departure of SEC enforcement chief Margaret Ryan.
Next Steps
As the court proceedings unfold, both Musk's legal team and the SEC will need to provide clarity on the settlement's terms and implications. Stakeholders will be watching closely to see how this situation develops.
