In 2022, the US Securities and Exchange Commission (SEC) under former chair Gary Gensler filed a case against Elon Musk concerning his acquisition of Twitter. The SEC questioned Musk’s 11-day delay in disclosing his investments in the social media company, alleging this delay allowed him to increase his share size, saving up to $150 million at the expense of Twitter’s shareholders.
Earlier this year, following changes in leadership at both the SEC and the White House, the agency reached a settlement in which Musk agreed to pay a civil penalty of $1.5 million while admitting no wrongdoing. Many viewed this penalty as trivial given Musk’s significant wealth.
On Thursday, US District Judge Sparkle Sooknanan finalized the settlement with a memorandum and order. Although Sooknanan approved the settlement, she expressed considerable doubts regarding its fairness. “This Court is limited to evaluating whether the proposed consent judgment meets minimum standards of fairness and reasonableness, or whether it instead ‘make[s] a mockery of judicial power,'” Sooknanan stated.
She further commented, “Although the Court has significant misgivings about the settlement reached in this case, it cannot say that the settlement meets that high threshold. Whether the Executive Branch (through the SEC) has done enough to hold Mr. Musk to account for his alleged violation is, like many other issues, for our citizenry to decide at the ballot box.”
