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🇸🇬 Singapore /Economy & Trade

SEC Defends Musk Settlement Over Twitter Shares, Citing 'Compromises'

From CNA · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Named sources In the courts
  • The U.S. Securities and Exchange Commission (SEC) defended its settlement with Elon Musk over his delayed disclosure of Twitter share purchases.
  • The SEC stated the settlement reflects "compromises" from arm's-length negotiations and is not tainted by collusion.
  • The deal requires a trust in Musk's name to pay $1.5 million to resolve claims that Musk took too long to disclose his stake, allowing him to buy shares at lower prices.

The U.S. Securities and Exchange Commission (SEC) has defended its settlement with Elon Musk concerning his purchase of Twitter shares, asserting that the agreement reflects necessary "compromises" and was not the product of collusion. This defense comes after the judge overseeing the case expressed concerns, calling the accord "red flags."

compromises

— SECThe SEC used this term to describe the nature of the settlement negotiations with Elon Musk.

In a filing with the Washington, D.C. federal court, the SEC also noted that the settlement, if approved, will permit Musk to publicly deny its accusations. This provision aligns with a recent policy shift regarding defendants who settle enforcement actions. The settlement mandates that a trust established in Musk's name will pay $1.5 million to resolve SEC claims. These claims allege that Musk unduly delayed disclosing his purchase of Twitter shares between March and April 2022, a delay that allegedly allowed him to acquire stock at lower prices before the market reacted.

red flags

— Judge Sparkle SooknananThe judge overseeing the case used this phrase to describe her concerns about the settlement.

Musk has maintained that the delayed disclosure was unintentional. He eventually acquired Twitter for $44 billion in October 2022, subsequently renaming it X. During a May 13 hearing, U.S. District Judge Sparkle Sooknanan voiced reservations about "rubber stamping" the settlement. She questioned the SEC's decision to fine the trust rather than Musk directly and its acceptance of a penalty representing only 1 percent of his alleged $150 million in illicit gains. The judge emphasized her duty to consider whether the settlement served the public interest and was free from collusion or corruption.

rubber stamp

— Judge Sparkle SooknananThe judge stated she could not simply approve the settlement without scrutiny.

The SEC countered in its filing that the settlement is "fair, reasonable, and appropriate," stemming from "arm’s length negotiations among counsel of record" rather than improper collusion. The agency maintained that the $1.5 million penalty represents the largest of its kind and that settling with the trust aligns with its recent practices. "The public benefits from an injunction that has the practical effect of binding Musk whenever he acts through the Revocable Trust, an investment vehicle that he appears to use to manage much of his wealth," the SEC stated. Lawyers for Musk did not immediately respond to requests for comment.

fair, reasonable, and appropriate

— SECThe SEC described the settlement using these terms in its defense filing.
DistantNews Editorial

Originally published by CNA in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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