Elon Musk Settles SEC Lawsuit Over Twitter Purchase Delay

Elon Musk has reached a settlement regarding a civil lawsuit from the Securities and Exchange Commission (SEC). This lawsuit claimed that Musk, the world’s wealthiest person, delayed announcing his initial stock purchase of Twitter—now rebranded as X—back in 2022.

The trust established in Musk’s name is set to pay a civil penalty of $1.5 million, but it’s important to note that the settlement doesn’t require Musk to admit any wrongdoing. Interestingly, he won’t have to give up any of the funds he allegedly saved due to this delay.

This agreement was made public on Monday during a federal court session in Washington, D.C. Musk’s attorney did not reply to requests for a statement.

According to the SEC, an 11-day delay in Musk’s disclosure of his initial 5% stake in Twitter, which occurred in late March or early April 2022, allowed him to purchase over $500 million worth of shares at artificially low prices.

The SEC had argued that Musk should incur civil penalties and reimburse the $150 million he supposedly gained at the cost of unsuspecting investors.

Musk contended that the delay was unintentional and criticized the SEC for infringing upon his free speech rights through their actions.

It’s worth mentioning that he finalized the $44 billion acquisition of Twitter in October 2022. The civil penalty he is facing is noted to be the largest in SEC history for the type of violation he was charged with, as stated by sources familiar with the settlement.

Regarding the SEC’s aim to recover $150 million, it appears they may have faced challenges in establishing proof in a court of law, according to insiders who are knowledgeable about the settlement.

Musk’s history with the SEC has been tumultuous. He faced securities fraud charges in September 2018 after tweeting that he had “secured” funding for a potential privatization of Tesla. Musk settled that case with a $20 million civil penalty, agreed to have some of his tweets approved by Tesla’s attorneys, and gave up his position as chairman of Tesla.

This latest settlement comes just three months after U.S. District Judge Sparkle Skunanan denied Musk’s attempt to dismiss the lawsuit. Discussions for a settlement were announced on March 17.

The SEC initiated this lawsuit shortly before former President Joe Biden’s term ended, and it came during a time when current SEC Chairman Paul Atkins has shifted the regulator’s focus in terms of enforcement priorities.