Tesla CEO Elon Musk has reached an agreement with federal regulators to pay $1.5 million in penalties over allegations he delayed reporting his early Twitter stock purchases in 2022.
The Securities and Exchange Commission filed the civil case in January, claiming Musk violated disclosure rules by waiting 11 days beyond the legal deadline to report his initial 5% stake in the social media company, now called X. According to the lawsuit, this delay occurred in late March and early April 2022.
Federal regulators alleged the billionaire’s failure to promptly announce his investment allowed him to purchase more than $500 million worth of additional Twitter shares at lower prices before the market knew of his involvement.
Under the settlement terms announced Monday in Washington D.C. federal court, a trust associated with Musk will pay the penalty without acknowledging any wrongdoing. The agreement does not require him to return the estimated $150 million he allegedly saved through the delayed disclosure.
Musk previously defended himself by claiming the delay was unintentional and argued that the SEC was infringing on his constitutional right to free speech by pursuing the case.
The billionaire entrepreneur ultimately acquired Twitter for $44 billion in October 2022.
According to sources familiar with the agreement, Musk’s penalty represents the highest fine ever imposed by the SEC for this particular type of violation.
Legal experts suggested that proving the SEC’s demand for the $150 million in alleged savings would have been challenging in court proceedings.
This settlement marks the latest chapter in Musk’s ongoing disputes with securities regulators, which began in September 2018 when he was charged with fraud for tweeting that he had “secured” financing to take Tesla private.
That earlier case resulted in a $20 million fine, requirements for Tesla attorneys to review certain social media posts, and Musk stepping down as Tesla’s board chairman.
The resolution came three months after U.S. District Judge Sparkle Sooknanan denied Musk’s attempt to have the case dismissed. Court records show both parties began settlement discussions on March 17.
The SEC initiated this lawsuit just six days before former President Joe Biden’s term ended and Donald Trump returned to office. The agency’s current leadership under Chairman Paul Atkins has been adjusting enforcement strategies and priorities.
