Elon Musk’s trust just paid $1.5 million to settle an SEC case over a stock disclosure violation the agency itself once pegged at $150 million. That’s a 1% penalty on the gain U.S. District Judge Sparkle Sooknanan says he pocketed by staying quiet.
Sooknanan approved the consent judgment Wednesday, but she didn’t pretend to like it. “Significant misgivings,” “red flags” — her words, not the SEC’s. She still signed it, because the bar for a judge to reject a negotiated settlement is high, and this one, barely, cleared it.
The case traces to 2022, when Musk built a 9% stake in Twitter stock without filing the Schedule 13D disclosure required within 10 days under securities law. He blew past that deadline, the SEC says, and kept buying shares at depressed prices in the meantime, underpaying sellers by at least $150 million before he took the whole company private later that year.
Here’s the number that matters more than the settlement: Musk’s net worth sits close to $1 trillion, per the court record, which makes a $1.5 million fine roughly 0.00015% of it. The SEC let Musk’s revocable trust stand in for him in the settlement instead of Musk personally, a structure the agency admitted it’s never used before for a 13(d) case. That’s what lets Musk claim publicly he was “cleared.”
Investors weren’t compensated. The SEC dropped its disgorgement request entirely. Separately, Twitter shareholders are still chasing Musk for $2.6 billion in a related fraud suit after a jury already found he made false statements.
Marcus Webb