Elon Musk has settled a US Securities and Exchange Commission civil lawsuit that accused the world's richest person of waiting too long in 2022 to disclose his initial purchases of stock in Twitter, now known as X. A trust in Musk's name will pay a $1.5m civil penalty without admitting wrongdoing, and Musk will not have to give up any money he allegedly saved from the delay.
Settlement Details
The settlement was disclosed on Monday in Washington DC federal court. In its January 2025 lawsuit, the SEC said Musk's 11-day delay in revealing his initial 5% Twitter stake in late March and early April 2022 allowed him to buy more than $500m in shares at artificially low prices, before he finally disclosed a 9.2% stake. The SEC had argued that Musk should pay a civil fine and repay the $150m he allegedly saved at the expense of unsuspecting investors.
Musk's Response
Musk called the delay inadvertent and accused the SEC of violating his free speech rights. His lawyer, Alex Spiro, said in a statement: "Mr Musk has now been cleared of all issues related to the late filing of forms in the Twitter acquisition, as we said from the outset he would be." Musk completed the $44bn Twitter purchase in October 2022, later folding it into his AI company xAI, which was then folded into his rocket company SpaceX. Forbes magazine values Musk at $789.9bn.
SEC Context
The SEC sued Musk six days before Joe Biden left the White House and was replaced by Donald Trump. Paul Atkins, the SEC chair, has been refocusing the regulator's enforcement priorities. Both sides had disclosed on 17 March they were in talks to settle, one day after SEC enforcement chief Margaret Ryan abruptly left her job after just over six months. The SEC did not immediately respond to a request for comment over the settlement.
Penalty and Legal History
Musk's civil penalty is the largest in SEC history for this type of violation, a person familiar with the settlement said. The SEC's effort to recoup the $150m may have been tough to undertake in court, people familiar with the settlement said. Musk has had a fraught relationship with the SEC since September 2018 when the regulator charged him with securities fraud for tweeting he had "secured" funding to take Tesla private. He settled that case by paying a $20m civil fine, letting Tesla lawyers review some Twitter posts in advance, and giving up his role as Tesla's chair.
Monday's settlement came three months after US District Judge Sparkle Sooknanan rejected Musk's bid to dismiss the case. This case is separate from a civil lawsuit in which a San Francisco jury held Musk liable on 20 March for defrauding Twitter shareholders after announcing the buyout. Shareholders alleged that Musk questioned whether Twitter was overrun by bots to force renegotiation or back out, causing stock price declines. Musk is trying to overturn that verdict or get a new trial.
