Elon Musk has resolved a civil lawsuit filed by the U.S. Securities and Exchange Commission regarding the timing of his disclosure of initial Twitter purchases in 2022. A trust in Musk’s name will pay a $1.5 million US civil fine as part of the settlement revealed in a Washington, D.C., federal court on Monday.
While Musk did not admit any wrongdoing, he will not have to relinquish any of the $150 million he allegedly gained from the delayed disclosure. The settlement is subject to approval by U.S. District Judge Sparkle Sooknanan, who had previously denied Musk’s attempt to dismiss the case in February.
The resolution brings an end to over seven years of legal disputes between Musk and the regulator. These conflicts began in September 2018 when the SEC accused Musk of securities fraud for claiming he had secured funding to take Tesla private through a tweet.
Musk previously settled a case related to this by paying a $20 million civil fine, allowing Tesla attorneys to review some of his tweets in advance, and stepping down as Tesla’s chairman. His lawyer, Alex Spiro, stated that Musk has now been cleared of any issues concerning the delayed filing of forms in the Twitter acquisition, as anticipated.
The SEC had alleged that Musk’s 11-day delay in revealing his initial five percent stake in Twitter allowed him to purchase over $500 million worth of shares at artificially low prices before disclosing a 9.2 percent stake. Musk defended the delay as inadvertent and accused the SEC of infringing on his free speech rights.
The SEC filed the lawsuit just before the end of former U.S. President Joe Biden’s term, and it has since been noted that the current SEC Chairman Paul Atkins is redirecting the regulator’s enforcement focus. The $1.5 million penalty imposed on Musk has been considered a modest sum given his status as the wealthiest person globally but is seen as a deterrent against similar violations by others.
Musk finalized the $44 billion purchase of Twitter in October 2022, integrating it into his artificial intelligence company xAI, which was later merged into his rocket company SpaceX. His net worth, as reported by Forbes magazine, stands at $789.9 billion.
A separate civil lawsuit related to Twitter is ongoing, where shareholders have accused Musk of defrauding them by causing Twitter’s stock price to drop through his comments, resulting in financial losses for the shareholders. Musk’s legal team is seeking to dismiss the case or secure a new trial, alleging bias and prejudice in the verdict.
Despite his involvement in various companies and regulatory investigations, Musk spearheaded cost-cutting initiatives during the second Trump administration before returning to his private sector ventures. Recently, Musk testified for several hours in a federal court in California regarding a lawsuit concerning OpenAI, aiming for damages and leadership changes within the organization.