Judge Approves $1.5 Million Musk-SEC Settlement Over Twitter Disclosure

US District Judge Sparkle Sooknanan approved a $1.5 million settlement between a revocable trust controlled by Elon Musk and the Securities and Exchange Commission that ends a lawsuit over untimely disclosure of a Twitter stake. The judge wrote that she has significant misgivings about the settlement and identified red flags in the SEC’s decision-making.

She stated that the agreement meets the minimum standards of fairness and reasonableness and that the court must accept the parties’ consent judgment.

The settlement requires the trust, with Musk as sole trustee and beneficiary, to pay a $1.5 million civil penalty. It imposes a prohibition on future violations on the trust rather than on Musk personally, and neither the trust nor Musk admitted wrongdoing.

The SEC filed the lawsuit in January 2025 in US District Court for the District of Columbia. It alleged that Musk failed to disclose his 9 percent stake within the required 10 days, allowing him to buy shares at artificially low prices and underpay Twitter investors by at least $150 million.

The SEC dropped its earlier request for disgorgement of alleged unjust enrichment after more than a year of negotiations. The agency told the court it has not historically obtained disgorgement in Section 13(d) cases, though it has the statutory authority to seek it.

Sooknanan noted that the SEC has never before settled a Section 13(d) violation with a trust without the trustee or beneficiary. She added that whether the Executive Branch has done enough to hold Musk to account is for the citizenry to decide at the ballot box.

Twitter investors who sued Musk over a separate violation are seeking an estimated $2.6 billion in damages after a jury found he made false statements.