BY MIRABEL ODETA
Billionaire entrepreneur Elon Musk has reached a settlement with the U.S. Securities and Exchange Commission (SEC) over allegations that he waited too long in 2022 to disclose his initial purchases of Twitter stock before ultimately acquiring the social media platform, now known as X.
According to court documents filed Monday in federal court in Washington, D.C., a trust associated with Musk will pay a $1.5 million civil penalty as part of the agreement. The settlement still requires approval from U.S. District Judge Sparkle Sooknanan.
Under the terms of the deal, Musk does not admit wrongdoing and will not be required to surrender the estimated $150 million regulators claimed he saved by delaying disclosure of his growing ownership stake in Twitter.
The lawsuit, filed by the SEC in January 2025, accused Musk of violating securities laws by failing to promptly reveal that he had acquired more than 5% of Twitter’s shares in early 2022. Federal rules require investors to publicly disclose when they pass that ownership threshold because such purchases can influence stock prices and investor decisions.
The SEC argued that Musk delayed the disclosure by 11 days, allowing him to continue purchasing shares at lower prices before publicly announcing a 9.2% stake in the company. Regulators claimed the delay gave Musk an unfair financial advantage while leaving other investors unaware of his growing involvement with the platform.
Musk denied intentionally violating the rules and described the delay as inadvertent. He also accused the SEC of unfairly targeting him and infringing on his free speech rights.
The settlement marks the latest chapter in a long and often tense relationship between Musk and the SEC that stretches back more than seven years. Their conflict first escalated in 2018 when the regulator charged Musk with securities fraud after he posted on Twitter that he had “secured” funding to potentially take electric vehicle maker Tesla private.
That earlier case ended with Musk agreeing to pay a $20 million fine, step down as Tesla’s chairman, and allow company lawyers to review certain social media posts in advance.
Following the latest settlement, Musk’s attorney Alex Spiro said the agreement confirms that his client was ultimately cleared regarding issues tied to the late filing during the Twitter acquisition process.
The SEC declined public comment on the settlement.
The timing of the original lawsuit drew political attention because the SEC filed the case just days before former President Joe Biden left office and was succeeded by President Donald Trump. Since taking office, Trump-appointed SEC Chairman Paul Atkins has reportedly shifted the agency’s enforcement priorities.
Some former SEC officials criticized the outcome of the settlement. Amanda Fischer, who previously served as chief of staff to former SEC Chair Gary Gensler, called the agreement “an embarrassing day for the SEC,” arguing that it could raise concerns about whether powerful insiders receive preferential treatment.
Others, however, viewed the penalty as symbolically important even if the financial amount is relatively small compared with Musk’s immense fortune. Legal experts noted that while $1.5 million is minor for one of the world’s wealthiest individuals, the settlement still reinforces the idea that disclosure rules apply to all investors.
Musk’s business empire has expanded dramatically since his 2022 purchase of Twitter for $44 billion. After taking over the platform, he rebranded it as X and later integrated it into his artificial intelligence company, xAI. Musk also maintains leadership roles at SpaceX and Tesla, two of the world’s most closely watched technology companies.
The settlement also follows internal changes at the SEC. Both parties disclosed in March that they were discussing a resolution shortly after SEC enforcement chief Margaret Ryan unexpectedly left the agency following reported disagreements over enforcement policy.
Although this case is now nearing resolution, Musk still faces other legal battles connected to the Twitter acquisition. In a separate civil case, a San Francisco jury ruled in March that Musk defrauded Twitter shareholders during the takeover process.
Shareholders in that lawsuit argued that Musk publicly questioned the number of fake or spam accounts on Twitter in an attempt to pressure the company into renegotiating the acquisition price or allowing him to exit the deal entirely. According to the lawsuit, those comments caused Twitter’s stock price to fall, harming investors who sold shares at reduced prices.
The shareholders estimate potential damages in that case could reach $2.5 billion. Musk’s legal team is seeking either dismissal of the verdict or a new trial, arguing that the jury’s decision was influenced by bias against the billionaire entrepreneur.
Despite the legal controversies, Musk remains one of the most influential figures in technology, business, artificial intelligence, and space exploration. Forbes currently estimates his net worth at nearly $790 billion, maintaining his position among the wealthiest people in the world.
Original article
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