Federal Judge Says SEC Settlement With Musk Raises Red Flags -- WSJ

Dow Jones04:04

A federal judge in Washington, D.C. on Wednesday said that a settlement the Securities and Exchange Commission reached with Elon Musk over his purchase of Twitter shares before taking control of the company "raises some red flags."

Judge Sparkle Sooknanan said she can't just "rubber stamp" the agreement, which would require Musk's family trust to pay a $1.5 million fine to resolve the SEC's claims that Musk failed to timely disclose his purchase of shares in Twitter in 2022 as he took control of the social-media network he later renamed X.

Sooknanan explained she is required by court precedent to review the agreement for fairness and reasonableness and in doing so noticed irregularities. She questioned why the SEC was fining the trust and not Musk personally, which she said "seems strange," and why the agency decided to drop its demand for Musk to pay back his alleged ill gotten gains.

The SEC originally sued Musk personally, but dropped him as a defendant just before the settlement was reached. Musk's lawyer then said his client had been cleared of wrongdoing.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

May 13, 2026 16:04 ET (20:04 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.

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