Over $200 million is sitting at the center of a possible corruption probe, and a federal judge wants answers.
Judge Sooknanan ordered Musk and the SEC to explain, by June 1, how they reached their settlement: specifically, why the deal routes through a trust tied to Musk instead of the billionaire himself. The SEC filed its lawsuit in January 2025, with only days left in the Biden administration. The allegation: Musk violated a stock disclosure rule enforced under a “strict liability” standard, meaning intent doesn’t matter. A violation is a violation. By December 2024, SEC attorneys had reportedly asked Musk to pay over $200 million to resolve the case.
Then Trump took office and issued an executive order requiring independent agencies to take orders from the president. The SEC, which historically operated with independence from the White House, found its way to a deal. Sooknanan isn’t buying the process. Her order last week laid out the legal test: courts must consider whether a settlement is “fair, adequate, reasonable and appropriate” under the specific facts, and whether it “was tainted by improper collusion or corruption.”
SEC attorney Nicholas Grippo told the court the questions were “important” and “fair,” and promised to answer them. Musk’s camp had already struck out twice: the court rejected his attempt to move the case to Texas, and Sooknanan denied his motion to dismiss in February 2026.
The brief is due June 1.
Marcus Webb