Judge approves $1.5M Musk settlement despite 'significant misgivings'

In her order issued Wednesday in a Columbia District Court, Judge Sooknanan criticized the agreement as a mere fraction of the financial gains Musk secured through his delayed reporting. Under the terms, the penalty is paid by a trust in Musk’s name rather than by the billionaire personally, a tactical move the court noted allows him to claim no relief was entered against him in his individual capacity. Sooknanan expressed skepticism about whether the SEC would grant similar treatment to other securities-law violators, noting the settlement avoids any compensation for shareholders who allegedly suffered economic harm during the delay.

Musk was legally required to report his ownership stake within 10 days of exceeding five percent of Twitter. Instead, he waited 21 days, a window during which he continued to purchase shares, ultimately increasing his stake to 9.2 percent. The SEC’s original case sought to force Musk to disgorge his profits from the violation, but the final deal leaves him with the majority of those gains. The judge concluded that while the SEC’s decision-making raised red flags, the court was constrained by the requirement to accept agreements that meet minimum standards of fairness, leaving the ultimate accountability for the agency’s approach to the public.