Musk pays $1.5 million to resolve SEC Twitter stake issue
Elon Musk has consented to pay $1.5 million to resolve allegations from the Securities and Exchange Commission that he misled Twitter shareholders in 2022 by not adequately disclosing his increasing ownership in the social media platform. A revocable trust established by Elon Musk would settle the penalty to conclude the SEC’s lawsuit under the proposed plan, pending court approval. Musk did not acknowledge the allegations made by the regulator, as stated in a filing on Monday. The penalty is significantly less than what Musk’s attorney indicated the SEC originally pursued. In December 2024, the agency requested that Musk pay over $200 million to reach a settlement, as indicated. The SEC filed a lawsuit against Musk in January 2025, just days prior to President Donald Trump’s inauguration, claiming that Musk failed to meet the deadline for disclosing his acquisition of over 5% of the social media platform’s stock. The regulator stated that the delay resulted in a loss of over $150 million for Twitter shareholders. Musk subsequently acquired the company in 2022 and rebranded it as X.
An SEC spokesperson stated that the deal, if finalized, would represent the largest penalty the agency has imposed on an entity or individual for allegedly failing to timely file a beneficial ownership report. Musk’s attorney, however, referred to it as a “small fine.” And “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,” stated Alex Spiro. “A trust vehicle has consented to a minor penalty for a delay in one filing.” The SEC initially pursued a civil penalty along with the recovery of illicit profits, including interest. The agreement revealed on Monday constitutes merely a civil penalty. During the January 2025 lawsuit, Musk was a prominent ally of Trump, having contributed hundreds of millions of dollars to support his election campaign. Once Trump took office, Musk managed a significant restructuring of the federal government before experiencing a public disagreement with the president. The case was also complicated within the agency.
Commissioner Mark Uyeda, a Republican who would later serve as the SEC’s acting chairman, took the unusual step of requesting enforcement staff members to assert that the case was not politically motivated, as reported. The agency stated that the billionaire’s substantial investment in the company would have caused the stock price to surge had the public been aware, and that investors who divested their shares forfeited significant profits. The lawsuit claims that Musk accumulated shares at an unjust discount in secret. According to the lawsuit, once he properly disclosed his purchase, Twitter shares surged 27%. The SEC initiated its investigation into Musk’s Twitter acquisitions in 2022. In September 2024, Musk opted to attend a rocket launch for his SpaceX company rather than meet with SEC attorneys who had traveled to Los Angeles for his deposition in the case.
Musk proposed a sum of a few thousand dollars to reimburse the travel expenses of the government lawyers. The agency hesitated. Upon the SEC’s filing of its lawsuit, Musk’s attorney characterized the agency’s actions as a prolonged “campaign of harassment” directed at the billionaire. He remarked at that time that the nature of the allegations against Musk would typically result in only a nominal penalty. Musk aimed to dismiss the SEC’s case in August, describing it as “a waste of this court’s time and taxpayer resources.” The SEC urged the judge to hold Musk liable without a trial, asserting that there is “absolutely no dispute” that the billionaire failed to meet the deadline. Musk continues to contend with a class-action investor lawsuit regarding the same overlooked disclosure deadline.
