After a prolonged legal battle between Elon Musk and U.S. regulators over his past purchase of Twitter shares, the technology CEO is getting off with little more than a slap on the wrist.
The U.S. Securities and Exchange Commission on Monday filed a proposed settlement in the case, which began after it sued Musk in the waning days of the Biden administration. The SEC had accused the billionaire of failing to file a timely disclosure that he had acquired more than 5% of voting shares of Twitter, which he ultimately bought for around $44 billion in 2022.
According to the SEC’s complaint, Musk publicly disclosed that he owned more than 9% of Twitter’s outstanding common shares 11 days later than he was required to. The then-public company’s share price rose more than 27% after Musk’s disclosure, according to the filing.
Musk paid more than $500 million for Twitter shares between March 25, 2022 and April 1, 2022. But the SEC argued that he would have needed to pay at least $150 million more to buy the same number of shares during that time if he had disclosed his initial purchases earlier.
“Musk’s violation resulted in substantial economic harm to investors” who sold shares during that time, the SEC said in its complaint.
The proposed settlement would require the Elon Musk Revocable Trust to pay the SEC a $1.5 million civil penalty, with no admission of wrongdoing.
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The order would also “permanently” restrain and enjoin Musk’s trust from violating the section of the Exchange Act that was the subject of this case, according to the text of the proposed settlement. That would also apply to any of the trust’s officers, agents, employees and lawyers.
Musk has said that his filing delay was inadvertent and that he submitted his disclosure on the business day after his wealth manager consulted legal counsel about potential filing requirements. He also criticized the SEC for seeking monetary relief “more than 1,500 times larger” than it had sought in similar cases, according to a legal filing.
After acquiring Twitter and taking it private in 2022, Musk renamed the social-media platform “X.” His artificial-intelligence startup xAI purchased the company last year in a deal that valued X at $33 billion. Then, Musk’s SpaceX in February acquired xAI.
Musk’s net worth is estimated to be about $657 billion, according to Bloomberg’s Billionaire Index, mostly thanks to his stakes in SpaceX and Tesla SpaceX is planning to pursue an initial public offering as soon as next month, which could value the company at up to $2 trillion.
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The settlement would put an end to Musk’s latest feud with the SEC, which went after him in 2018 after he tweeted that he had the “funding secured” to take Tesla private. That case, too, was settled, with Musk and Tesla each paying $20 million in penalties.
