ONE BIG THINGFederal judge throws serious shade on Musk’s tiny settlement in Twitter lawsuit
A federal judge reluctantly signed off on the settlement of an SEC lawsuit against Elon Musk, using language suggesting that the deal was a lousy one for shareholders. The SEC alleged he broke the law in 2022 by failing to disclose that his stake in Twitter had crossed a 5% threshold. Musk didn’t make the disclosure because he knew it would drive up the stock price and thus cost him more to continue increasing his stake in Twitter, the suit claimed. Authorities claimed he bought $500 million worth of Twitter shares after he was supposed to publicly disclose his portion of the company, and saved himself $150 million by not doing so—value that could have gone to shareholders had it been disclosed.
The settlement was for just $1.5 million, Fortune’s Amanda Gerut reports.
The judge said she had “serious misgivings” and saw “red flags” in the settlement, given its small size. “That bears repeating: Elon Musk, the richest person in the world with a net worth close to $1 trillion, allegedly ignored his obligation to file SEC disclosures at the expense of other investors to the tune of $150 million,” she wrote. “Whether the Executive Branch (through the SEC) has done enough to hold Mr. Musk to account for his alleged violations is, like many other issues, for our citizenry to decide at the ballot box.”
