A federal judge on Wednesday reluctantly signed off on a settlement that lets Elon Musk avoid a judgment against him personally in the government’s securities case, saying the deal raised repeated red flags but that the law gave her little room to reject it.
The SEC sued Musk in January 2025, alleging he violated federal disclosure law by quietly amassing Twitter stock in 2022 without telling the public he intended to take over the company, a delay the agency said saved him roughly $150 million at other investors’ expense. The SEC originally sought to claw back that sum.
But under the settlement U.S. District Judge Sparkle Sooknanan entered, none of the relief runs against Musk. A $1.5 million penalty and an injunction instead fall on the Elon Musk Revocable Trust, an entity added as a defendant only weeks earlier, and the SEC agreed to drop its claim against Musk himself.
Sooknanan did not hide her discomfort, noting the amended complaint was filed three minutes before the settlement motion, suggesting it was written to fit the deal, and that the structure appeared designed so Musk could say no judgment was entered against him. The SEC, she wrote, admitted the trust arrangement “was a request by [Mr.] Musk and a compromise by the SEC.” She said she was “left to wonder whether the SEC will afford other alleged securities-law violators such solicitude,” or whether this was “a one-time deal designed for Mr. Musk.”
She also flagged that the $1.5 million penalty is roughly 1% of the money at stake, from a defendant she noted is the world’s richest person, worth close to $1 trillion.
“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.’… Although the Court has significant misgivings about the settlement reached in this case, it cannot say that the settlement meets that high threshold,” she wrote. “That means that this Court must accept the Parties’ consent judgment. 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.”
The post Wary judge greenlights dubious Musk-SEC deal despite ‘significant misgivings’ appeared first on Raw Story.
