A federal judge has approved Elon Musk’s $1.5 million settlement with the US Securities and Exchange Commission over his delayed disclosure of Twitter share purchases in 2022.
The decision ends the SEC lawsuit, though US District Judge Sparkle Sooknanan raised doubts about the agreement. She wrote that the court had ‘significant misgivings’ but could not reject the deal under the legal standard required.
Judge Sooknanan approved the settlement in Washington, DC, after reviewing whether the agreement met basic standards of fairness and reasonableness. The judge said the court’s role was limited and did not allow a wider review of the SEC’s choices.
In her opinion, Sooknanan said the court had to decide whether the settlement made “a mockery of judicial power.” She wrote, “Although the Court has significant misgivings about the settlement reached in this case, it cannot say that the settlement meets that high threshold.”
The judge also pointed to ‘red flags’ around the agreement. She questioned why the SEC accepted payment from a trust in Musk’s name instead of Musk directly paying the penalty.
Sooknanan said the arrangement left the court to wonder whether the SEC would give similar treatment to other people accused of breaking securities laws. She also noted that the structure could allow Musk to publicly claim that he had been cleared of wrongdoing.
The SEC sued Musk in early 2025 over his purchase of Twitter shares before he launched his full takeover of the company. The agency said Musk waited 11 days too long in March and April 2022 to disclose his growing stake.
Under federal securities rules, investors must report when they cross certain ownership levels in public companies. The SEC said Musk’s late filing allowed him to keep buying Twitter shares at lower prices before the market reacted.
According to the SEC, the delayed disclosure helped Musk avoid about $150 million in higher costs. The agency described that amount as gains tied to the delay.
Musk has said the filing delay was accidental. He did not admit wrongdoing under the settlement. The agreement states that a trust in his name will pay the $1.5 million civil penalty.
The approved deal resolves the SEC’s civil case linked to Musk’s early Twitter stock purchases. Musk later completed his $44 billion purchase of Twitter in October 2022 and renamed the platform X.
The case also drew wider attention due to Musk’s public profile and his role in several major companies. He leads Tesla and is also tied to SpaceX, where X is now part of the broader business structure.
Sooknanan previously questioned whether Musk was receiving ‘special treatment’ under the Trump administration. Musk had supported Donald Trump’s 2024 campaign, and the SEC filed the case shortly before Trump returned to office.
Still, the judge said the court could not replace the SEC’s judgment with its own. She wrote that whether the government had done enough to hold Musk accountable was a matter for the public to judge ‘at the ballot box.’
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