By Nicola M. White
Bloomberg News
(TNS)<\/p>\n
Elon Musk\u00a0agreed to pay $1.5 million to settle\u00a0Securities and Exchange Commission\u00a0allegations that he cheated Twitter shareholders in 2022 by failing to properly disclose his growing stake in the social media company.<\/p>\n
An\u00a0Elon Musk\u00a0revocable trust would pay the penalty to end the SEC\u2019s lawsuit under the plan, which is still subject to court approval. Musk didn\u2019t admit to the regulator\u2019s allegations, according to a filing on Monday.<\/p>\n
It\u2019s a much smaller penalty than what Musk\u2019s attorney said the\u00a0SEC\u00a0initially sought. The agency in December 2024 asked Musk to pay more than $200 million to settle, according to a letter his lawyers sent to the agency and reviewed by\u00a0Bloomberg News.<\/p>\n
The\u00a0SEC\u00a0sued Musk in\u00a0January 2025, days before President\u00a0Donald Trump\u00a0took office, alleging Musk blew the deadline to disclose he accumulated more than 5% of the social-media platform\u2019s stock. That delay cost Twitter shareholders more than $150 million, the regulator said. Musk later bought the company in 2022 and renamed it X.<\/p>\n
An\u00a0SEC\u00a0spokesperson said the deal, if finalized, would be the largest penalty the agency has levied against an entity or individual for allegedly failing to file a beneficial ownership report on time.<\/p>\n
Musk\u2019s attorney, however, called it a \u201csmall fine.\u201d<\/p>\n
\u201cMr. 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,\u201d\u00a0Alex Spiro, a lawyer for Musk, said in a statement. \u201cA trust vehicle has agreed to a small fine for being late on one filing.\u201d<\/p>\n
The\u00a0SEC\u00a0originally sought a civil penalty and a return of illegal profits, plus interest. The deal announced Monday represents only a civil penalty.<\/p>\n
At the time of the\u00a0January 2025\u00a0lawsuit, Musk was a key Trump ally who had donated hundreds of millions of dollars to help him get elected. Once Trump took office, Musk oversaw a massive restructuring of the federal government before having a public falling out with the president.<\/p>\n
The case was also fraught within the agency. Commissioner\u00a0Mark Uyeda, a Republican who later would serve as the SEC\u2019s acting chairman, took the unusual step of asking enforcement staff members to declare the case wasn\u2019t motivated by politics,\u00a0Bloomberg News\u00a0reported in\u00a0February 2025.<\/p>\n
The agency said the billionaire taking a huge position in the company would have sent the stock price soaring if the public knew and that investors who sold their shares missed out on big gains. Musk also stockpiled shares at an unfair discount behind the scenes, according to the lawsuit.<\/p>\n
Once he properly disclosed his purchase, Twitter shares surged 27%, the lawsuit said.<\/p>\n
The\u00a0SEC\u00a0first started probing Musk\u2019s Twitter purchases in 2022. In\u00a0September 2024, Musk stood up SEC attorneys who flew to\u00a0Los Angeles\u00a0for his deposition in the case, choosing to attend a rocket launch for his\u00a0SpaceX\u00a0company instead. Musk offered a few thousand dollars to cover the government lawyers\u2019 travel expenses. The agency balked.<\/p>\n
When the\u00a0SEC\u00a0filed its lawsuit, Musk\u2019s attorney accused the agency of waging a multi-year \u201ccampaign of harassment\u201d against the billionaire. He said at the time that the type of allegations against Musk would normally only carry a nominal penalty.<\/p>\n
Musk sought to dismiss the SEC\u2019s case in August, calling it \u201ca waste of this court\u2019s time and taxpayer resources.\u201d The SEC\u00a0responded by urging the judge to find Musk liable without a trial and said there is \u201cabsolutely no dispute\u201d the billionaire missed the deadline.<\/p>\n
Musk still faces a class-action investor suit over the same missed disclosure deadline.<\/p>\n
\u2014 With assistance from\u00a0Chris Dolmetsch\u00a0and\u00a0Zoe Tillman.<\/p>\n
Photo caption: Elon Musk talks to reporters in the Oval Office during a press conference with President Donald Trump on May 30, 2025 (The White House\/YouTube)<\/p>\n
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