Attorneys for Elon Musk and the Securities and Exchange Commission will appear before a federal judge in Washington on Wednesday to argue in support of their $1.5 million settlement over Musk's purchase of Twitter $TWTR stock.
Before she will approve the deal, Judge Sooknanan has said she intends to evaluate the settlement on multiple grounds, according to Reuters — among them whether both parties are treated fairly, whether ordinary investors' interests are served, and whether any improper collusion or corruption played a role in reaching the agreement. Wednesday's hearing was also called so that each side could put forward a proposed schedule for submitting written arguments backing the deal.
The lawsuit, filed by the SEC on Jan. 14, 2025 — six days before President Donald Trump took office — accused Musk of waiting too long to disclose that he had acquired more than a 5% stake in Twitter in April 2022. The delay allowed him to buy additional shares at lower prices, saving him $150 million while other investors lost out. Musk has said the late disclosure was inadvertent and that the lawsuit was politically motivated.
The $1.5 million penalty — the largest in SEC history for this type of violation — represents about 1% of what the agency alleged Musk improperly saved. Under the terms of the agreement, Musk faces no admission of liability and gets to keep the funds the SEC claims he improperly pocketed. Musk's attorney Alex Spiro said in a statement that "a trust vehicle has agreed to a small fine for being late on one filing."
Critics took a sharper view. Amanda Fischer, former chief of staff to ex-SEC Chair Gary Gensler, called it "an embarrassing day for the SEC," telling CNBC the settlement "should cause the public to question whether the SEC is protecting White House insiders at the expense of ordinary investors."
The settlement was announced on May 5 in federal court in Washington, D.C. It still requires Judge Sooknanan's approval — the same judge who rejected Musk's earlier attempt to have the case dismissed in February.
The resolution comes as the Trump administration has pulled back on certain types of corporate enforcement. Current SEC Chairman Paul Atkins has been reshaping the agency's enforcement priorities since taking over from Gary Gensler. Reuters previously reported that Margaret Ryan, who had been leading SEC enforcement efforts, walked away from the post in March — roughly half a year into the role — following friction with agency leadership about how aggressively the commission should pursue cases.
The Twitter disclosure case is separate from a civil class action in which a San Francisco jury found Musk liable in March for defrauding Twitter shareholders during the period leading up to his buyout. Plaintiffs in that case have put potential damages at $2.5 billion.