Judge has ‘serious misgivings’ about a $1.5M fine over Elon Musk’s Twitter takeover – but approves it anyway

Judge has ‘serious misgivings’ about a .5M fine over Elon Musk’s Twitter takeover – but approves it anyway

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A judge on Wednesday reluctantly approved a $1.5 million settlement in a lawsuit accusing Elon Musk of failing to immediately disclose his growing stake in what was then Twitter ahead of his eventual acquisition of the platform in 2022.

District of Columbia federal judge Sparkle Sooknanan wrote that she “significant misgivings” over the terms of the deal with the Securities and Exchange Commission. She argued that Musk’s allegedly delayed admission that he owned more than five percent of Twitter, which has been renamed X, is estimated to have saved him upwards of $150 million.

“Elon Musk, the richest person in the world with a net worth close to $1 trillion, allegedly ignored his obligation to file SEC disclosures at the expense of other investors to the tune of $150 million,” Sooknanan wrote. “That is why the SEC previously sought disgorgement from Mr. Musk in the ballpark of $150 million.”

“Whether the Executive Branch (through the SEC) has done enough to hold Mr. Musk to account for his alleged violation is, like many other issues, for our citizenry to decide at the ballot box,” she added.

The Independent has contacted Musk for comment.

A federal court approved a $1.5 million settlement in a suit accusing Elon Musk of missing a deadline to disclose his growing stake in what was then Twitter in 2022, despite the judge warning of her ‘significant misgivings’ over the terms (Reuters)

This May, the SEC moved to settle with Musk, later arguing its $1.5 million penalty against a Musk-related trust reflected appropriate “compromises by all parties.” The move was announced shortly before Musk’s company SpaceX, which now owns X, went public, temporarily making Musk the world’s first trillionaire.

“Mr. Musk has now been cleared of all issues related to the late filing of forms in the Twitter acquisition, as we said from the outset he would be,” Musk attorney Alex Spiro told The Wall Street Journal after the settlement was announced. “A trust vehicle has agreed to a small fine for being late on one filing.”

The SEC originally launched the suit in January of 2025 after years of investigation, days before the start of the Trump administration, after reportedly seeking a $200 million settlement on the allegations the month before.

Trump’s election catapulted Musk into a powerful position as the de facto head of DOGE, an administration effort to probe and slash the federal budget.

In her ruling, Sooknanan also questioned the SEC’s decision to settle with Musk’s trust rather than the billionaire himself, a step that technically allows him to claim he personally avoided punishment.

Musk’s alleged failure to disclose his early Twitter stock purchases saved him an estimated $150 million, and federal regulators were seeking a penalty about that size until the election of President Trump, who elevated Musk to a key role in his administration (Getty)

“The Trust seems like a particularly odd candidate for the SEC to break that new ground—after all, as mentioned, the Trust is a revocable trust with Mr. Musk as its sole trustee and beneficiary,” she wrote.

An SEC spokesperson declined to comment on the ruling.

When Musk did eventually disclose his stake, Twitter shares jumped by more than 25 percent, reflecting the intense investor interest around his involvement with the company.

Musk’s eventual 2022 acquisition of Twitter has been marred with controversy and legal issues.

The tech executive initially attempted to renege on his purchase bid, prompting Twitter to sue and Musk to launch a countersuit. The legal actions were extinguished when Musk bought the social media platform in October of 2022.

Twitter shareholders also sued Musk over the pullback during the acquisition process, and fired executives at the company sued over severance pay.