U.S. judge expresses concern over $1.5mln Twitter settlement

Last year, the Securities ‌and Exchange Commission accused Musk of waiting too long to disclose the ⁠buildup of his shares in Twitter in 2022

A federal judge on Wednesday cast doubt on the motives behind the U.S. Securities ‌and Exchange Commission’s $1.5 million settlement over Elon Musk’s purchase of Twitter, suggesting the deal may have been inked with the sole purpose of avoiding penalizing him personally.

U.S. District Judge Sparkle Sooknanan in Washington, D.C. last week had summoned attorneys for both sides to appear before her to discuss the settlement, ​which the judge said had a string of “irregularities” that required in-depth explanation. She reiterated that she could not “rubber ​stamp” their agreement.

Last year, the Securities ‌and Exchange Commission accused Musk of waiting too long to disclose the ⁠buildup of his shares in Twitter in 2022. This month, the SEC removed Musk as a defendant and replaced him ​with a legal trust bearing his name. The settlement also dropped demands for the return of $150 million in allegedly ill-gotten ​gains, and reduced the total amount sought by 99%. The judge said these terms were “red flags.”

Given all the irregularities I have noted, I have concerns, the judge said.

Sooknanan also noted that SEC lawyers at a prior hearing to discuss the case had appeared surprised when lawyers ​for Musk revealed that they had been in settlement talks with the agency.

That’s a red flag to me, the judge said.

The judge has said she must consider several ‌factors, ⁠including the settlement’s fairness to both sides, whether it is consistent with the public interest, and whether it is tainted by improper collusion or corruption.