A U.S. federal judge has approved a settlement that will see Elon Musk pay $1.5 million to the U.S. Securities and Exchange Commission (SEC) for failing to disclose his 2022 Twitter stock purchases within the legally required period. Even so, she was not happy about it. The penalty is a mere fraction of the amount Musk gained from the alleged violation, which he is apparently free to keep.
In her order filed in a Columbia District Court on Wednesday, Judge Sparkle Sooknanan expressed "significant misgivings" about the deal between Musk and the SEC. Under the agreement, Musk will pay $1.5 million to the SEC — literally one percent of the $150 million he allegedly saved due to his late disclosure. Further, the penalty will technically be paid by a trust in Musk's name rather than directly by the billionaire himself, a manoeuvre that the court noted appeared "for the sole purpose of Mr. Musk being able to say that no relief was entered against him in his personal capacity."
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However, as the court's role is only to assess whether the agreement meets "minimum standards of fairness and reasonableness," Sooknanan stated that it is therefore obligated to accept the deal."[T]he Court may not step in the shoes of the SEC, notwithstanding that the SEC's decision-making in this case raises red flags," Sooknanan wrote in her order on Wednesday. "So mindful of that principle and, as always, its proper role, the Court is constrained to accept the Parties’ agreement despite its significant misgivings."Sooknanan also questioned whether Musk was receiving special treatment."The Court is left to wonder whether the SEC will afford other alleged securities-law violators such solicitude," she wrote. "Or is this a one-time deal designed for Mr. Musk negotiated without the involvement of the SEC lawyers litigating this case?"
