Elon Musk settles SEC lawsuit over Twitter disclosures, US$1.5 million fine imposed

[WASHINGTON/NEW YORK] Elon Musk settled the US Securities and Exchange Commission’s (SEC) civil lawsuit accusing the world’s richest person of waiting too long in 2022 to disclose his initial purchases of Twitter, now known as X.

A trust in Musk’s name will pay a US$1.5 million civil fine, under the settlement disclosed on Monday (May 4) in the Washington, DC, federal court.

Musk did not admit wrongdoing, and will not have to give up any of the US$150 million he allegedly saved from the delay.

The settlement requires approval by US District judge Sparkle Sooknanan, who in February rejected Musk’s bid to dismiss the case.

It ends more than seven years of fraught battles between Musk and the regulator, starting in September 2018 when the SEC charged him with securities fraud for tweeting he had “secured” funding to potentially take his electric car company Tesla private.

Musk settled that case by paying a US$20 million civil fine, letting Tesla lawyers review some Twitter posts in advance, and giving up his role as Tesla’s chairman.

“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,” his lawyer Alex Spiro said.

The SEC declined to comment.

‘Embarrassing day,’ former SEC chief’s aide says

In its January 2025 lawsuit, the SEC said that Musk’s 11-day delay in revealing his initial 5 per cent Twitter stake in late March and early April 2022 let him buy more than US$500 million of shares at artificially low prices, before he finally revealed a 9.2 per cent stake.

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The SEC had argued that Musk should pay a civil fine and repay the US$150 million he allegedly saved at the expense of unsuspecting investors.

Musk called the delay inadvertent and accused the SEC of violating his free speech rights by targeting him.

The SEC sued Musk six days before former US President Joe Biden left the White House and was replaced by Donald Trump. Current SEC chairman Paul Atkins has been refocusing the regulator’s enforcement priorities.

“It’s an embarrassing day for the SEC,” said Amanda Fischer, former chief of staff to Gary Gensler, who chaired the regulator during the Biden administration. She said that the settlement “should cause the public to question whether the SEC is protecting White House insiders at the expense of ordinary investors”.

Musk led the Trump administration’s Department of Government Efficiency, which focused on cost-cutting, before leaving last May.

Robert Frenchman, a partner at the Dynamis law firm in New York, said the US$1.5 million penalty was a “modest sum for the richest person on the planet” but could deter similar violations by others.

“That is a statement to the market that the rules apply to everyone, even to Elon Musk,” he said.

Musk completed the US$44 billion Twitter purchase in October 2022.

He later folded Twitter into his artificial intelligence company xAI, and then folded xAI into his rocket company SpaceX. Forbes magazine says Musk is worth US$789.9 billion.

Settlement follows SEC enforcement chief’s departure

Both sides had disclosed on Mar 17 that they were in talks to settle, one day after SEC enforcement chief Margaret Ryan abruptly left her job after just over six months.

Ryan’s departure followed clashes with other leaders at the agency over enforcement, sources familiar with the matter have said.

A lawyer for Ryan did not immediately respond to a request for comment on Monday.

Musk’s civil penalty is the largest in SEC history for the type of violation he was accused of, a source familiar with the settlement said.

The case is separate from a civil lawsuit where a San Francisco jury held Musk liable on Mar 20 for having defrauded Twitter shareholders after announcing the buyout.

Shareholders in that class action alleged that Musk questioned whether Twitter was overrun by fake and spam accounts, known as bots, in an effort to force Twitter to renegotiate the takeover price or let him back out.

The shareholders said Musk’s comments caused Twitter’s stock price to fall, and that they suffered losses by selling shares at depressed prices. They have estimated that damages could total US$2.5 billion.

Musk’s lawyers, including Spiro, want that case dismissed or a new trial, calling the verdict “the result of bias and prejudice towards a polarising defendant.” REUTERS