Elon Musk and the U.S. Securities and Exchange Commission are set to reach a settlement to end the agency’s equity lawsuit against Twitter Inc. after nearly a year of negotiations, the agency’s lawyers said Monday after a judge expressed concerns about the deal.
“The $1.5 million civil penalty is consistent with the seven-figure penalty that SEC attorneys of record have insisted on since negotiations began in earnest, and reflects a concession by defendants who argued for a much lighter penalty during settlement discussions,” SEC attorneys wrote in a court filing.
They added that it also took into account the “litigation risks and substantial public resources required to handle the appeal”, stressing that it would be a record penalty for such a case.
Musk’s lawyers also praised the agreement as fair and reasonable.
“Both sides gave up something and each gained something in a compromise that reflected their respective claims and defenses,” they wrote in Monday’s filing.
Lawyers for both sides filed memoranda in response to U.S. District Judge Sparkle Sooknanan, citing “red flags” with the proposed penalties, such as why the SEC wanted to settle the case with a trust tied to Musk and whether the billionaire received special treatment in the case.
“I’m not going to put my stamp on this settlement, and I can’t put my stamp on this settlement,” Suknanan said in May.
The U.S. Securities and Exchange Commission (SEC) sued Musk in January 2025. accusation In 2022, Musk defrauded Twitter shareholders of more than $150 million by failing to promptly report that he was increasing his holdings in the social media company’s stock.
Musk later acquired the company and renamed it X.
The SEC filed the lawsuit days before President Donald Trump was inaugurated. At the time, Musk was an important ally of Trump and had donated hundreds of millions of dollars to help Trump get elected. He later fell out publicly with the president.
The SEC initially sought civil penalties and the return of illegal profits and interest. The latest proposed deal requires court approval and represents only civil penalties.
photo: Photographer: Al Drago/Bloomberg
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