Judge Approves $1.5 Million Settlement Between Musk Trust and SEC Over Twitter Disclosure

US District Judge Sparkle Sooknanan approved a $1.5 million settlement between Elon Musk and the Securities and Exchange Commission that resolves claims Musk failed to disclose a 9 percent stake in Twitter within 10 days after purchases in March and April 2022.

The settlement requires a revocable trust with Musk as its sole trustee and beneficiary to pay the civil penalty to the government. It imposes an injunction against future violations of the disclosure law on the trust rather than on Musk personally and does not require Musk or the trust to admit any wrongdoing.

The SEC filed the lawsuit in January 2025 in the US District Court for the District of Columbia. The agency alleged that the delayed disclosure allowed Musk to keep buying shares at artificially low prices and underpay Twitter investors by at least $150 million, according to Ars Technica.

The SEC dropped its request for disgorgement of profits, so the settlement provides no compensation to the investors.

Sooknanan wrote that she has significant misgivings about the settlement and identified red flags in the SEC's decision-making. She noted that the $1.5 million penalty equals roughly 1 percent of the amount potentially at stake and that the SEC has never before settled a Section 13(d) violation with a trust without the trustee or beneficiary.

The judge stated that the settlement meets minimum standards of fairness and reasonableness.

She added that whether the Executive Branch has done enough to hold Musk to account is for citizens to decide at the ballot box. The deal arose from more than a year of negotiations between the SEC and Musk.