A federal judge has approved Elon Musk’s $1.5 million settlement with the U.S. Securities and Exchange Commission (SEC) over his delayed disclosure of Twitter share purchases in 2022, despite expressing significant legal concerns about the agreement.
U.S. District Judge Sparkle Sooknanan endorsed the settlement in Washington, D.C., ending the SEC lawsuit. However, the judge wrote that the court had “significant misgivings” about the terms but could not reject the deal under the applicable legal standard.
Judge Questions Settlement Terms
Judge Sooknanan reviewed whether the agreement met basic standards of fairness and reasonableness, noting that the court’s role was limited and did not permit a broader review of the SEC’s enforcement choices.
In her opinion, Sooknanan stated that 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” surrounding the agreement. She questioned why the SEC accepted payment from a trust in Musk’s name rather than requiring Musk to pay the penalty directly. Sooknanan noted that this arrangement left the court to wonder whether similar treatment would be extended to others accused of violating securities laws. She also expressed concern that the structure could allow Musk to publicly claim he had been cleared of wrongdoing.
SEC Case Focused on Twitter Share Disclosure
The SEC sued Musk in early 2025 over his purchase of Twitter shares before his full takeover of the company. The agency alleged that Musk waited 11 days too long in March and April 2022 to disclose his growing stake.
Federal securities rules require investors to report when they cross certain ownership levels in public companies. The SEC argued that Musk’s late filing allowed him to continue buying Twitter shares at lower prices before the market reacted.
According to the SEC, the delayed disclosure helped Musk avoid approximately $150 million in higher costs—described as gains tied to the delay. Musk has said the filing delay was accidental and did not admit wrongdoing under the settlement. The agreement states that a trust in his name will pay the $1.5 million civil penalty.
Musk Settlement Ends SEC Lawsuit
The approved deal resolves the SEC’s civil case related 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 drew wider attention due to Musk’s public profile and his role in multiple major companies. He leads Tesla and is also tied to SpaceX, where X is now part of the broader business structure.
Judge Sooknanan had previously questioned whether Musk was receiving “special treatment” under the Trump administration. Musk supported Donald Trump’s 2024 campaign, and the SEC filed the case shortly before Trump returned to office. Nevertheless, the judge said the court could not substitute its judgment for the SEC’s. 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.”