Judge Questions $1.5M SEC-Musk Trust Settlement

A federal judge in Washington, D.C., expressed strong reservations Wednesday about a proposed $1.5 million settlement between the Securities and Exchange Commission and a trust affiliated with Elon Musk, stemming from his delayed disclosure of a major stake in Twitter in 2022.

U.S. District Judge Sparkle Sooknanan told attorneys for both sides during a hearing in the U.S. District Court for the District of Columbia that she would not rubberstamp the agreement. "I am not going to rubberstamp this settlement, and I cannot rubberstamp this settlement," she said. The judge cited several irregularities, including the SEC's decision to remove Musk as a defendant and substitute a trust in his name, the sharp reduction from its original demand of at least $150 million in penalties and disgorgement, and the lack of any admission of wrongdoing.

The case originated from Musk's purchase of more than 9 percent of Twitter shares in March 2022, ahead of his $44 billion acquisition of the company later that year, which he later rebranded as X. Federal securities law requires investors to disclose stakes exceeding 5 percent within 10 days. The SEC alleged in a lawsuit filed shortly before...