SEC defends Musk settlement over Twitter shares, calls deal fair and arms-length

The U.S. Securities and Exchange Commission on June 1 defended its $1.5 million settlement with Elon Musk over his late disclosure of Twitter stock purchases, calling the accord "fair, reasonable, and appropriate" and free of collusion. The filing followed U.S. District Judge Sparkle Sooknanan’s May 13 comment that the deal raised "red flags." The settlement requires a revocable trust in Musk’s name to pay the penalty for delaying by 11 days in March-April 2022 the filing that he held a 9% Twitter stake. The SEC said the fine was the largest of its type and that binding the trust effectively binds Musk, who uses it to manage much of his wealth. The regulator also noted the deal lets Musk publicly deny the allegations under a recent policy change. Musk, who acquired Twitter for $44 billion in October 2022 and renamed it X, has said the delay was inadvertent. Judge Sooknanan questioned why the SEC sought just 1% of the $150 million in alleged ill-gotten gains and whether the settlement served the public interest. The SEC maintained the accord arose from arm’s length negotiations.