A federal judge on Monday approved of the U.S. Securities and Exchange Commission’s settlement with billionaire Elon Musk over his purchase of Twitter shares. However, the judge also expressed significant “misgivings” about the “red flags” the accord raised.
U.S. District Judge Sparkle Sooknanan in Washington, D.C., said she had only a limited role in assessing whether the settlement meets minimum standards of fairness and reasonableness, or instead “makes a mockery of judicial power,” and questioned whether Musk was let off too easily.
“A court presented with a consent judgment is not a rubber stamp. But neither is it an ombudsman,” Sooknanan wrote. “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.” Musk was previously one of President Donald Trump’s advisers.
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The approvals settle a lawsuit filed by the SEC against Musk in early 2025 over how he handled the takeover of Twitter (now X). The lawsuit was about Musk’s failure to disclose his growing stake in the company to investors on time. The fact that Musk did not initially disclose his stake “ultimately saved him a whopping $150 million,” the SEC argued.
Previously Sooknanan had questioned whether Musk was receiving “special treatment” from the Trump administration. Musk had helped bankroll Trump during the 2024 presidential elections.
In May, the judge said SEC lawyers at a prior hearing appeared surprised when Musk’s lawyers revealed there had been settlement talks with the regulator.
“The court is left to wonder whether the SEC will afford other alleged securities-law violators such solicitude,” Sooknanan wrote. “Or is this a one-time deal designed for Mr. Musk negotiated without the involvement of the SEC lawyers litigating this case?”
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Payment of the $1.5 million penalty falls to a trust bearing Musk’s name, and no admission of wrongdoing is required under the agreement’s terms, according to reports.
Margaret Ryan, who had overseen SEC enforcement for roughly half a year before stepping down in March, was no longer at the agency when the settlement was made public in May. The $1.5 million penalty is the largest in its history for this type of violation. In a court filing, the agency said the settlement did not result from collusion. Musk’s attorney Alex Spiro called it “a small fine for being late on one filing.”