Trump SEC lets Musk settle $150 million Twitter lawsuit for $1.5 million

In a surprising turn of events, Elon Musk has been allowed by the Trump administration to settle a significant lawsuit with the Securities and Exchange Commission (SEC) for a mere $1.5 million. This settlement offers a stark contrast to the initial claim, which sought damages of at least $150 million. If a federal court approves this proposed settlement, a trust established in Musk's name will be responsible for paying the civil penalty. The lawsuit, which traces back to January 2025, was filed during the concluding days of the Biden administration. It centers around Musk's acquisition of a 9 percent stake in Twitter in 2022, which he failed to disclose within the legally mandated ten-day window. The SEC asserted that this delayed disclosure allowed Musk to buy shares at artificially low prices, enabling him to save at least $150 million on his purchases following the missed deadline. After Musk finally revealed his stake, Twitter’s stock prices surged, ultimately leading to his full acquisition of the company later that same year. The SEC's lawsuit sought not only the repayment of his unjust gains but also additional interest and a separate civil penalty. However, the investigation into Musk's late disclosure had been ongoing for nearly three years prior to the lawsuit, leaving little time for litigation before the Trump administration took office. Musk was charged with violating Section 13(d) of the securities law, which operates under a strict liability standard, meaning intent does not factor into the violation. This could explain the Trump administration's decision to continue pursuing the case rather than dropping it entirely. Initially filed in the U.S. District Court for the District of Columbia, Musk's efforts to shift the case to a Texas court were unsuccessful, as was his attempt to dismiss the lawsuit altogether. Notably, this week, the Trump administration modified the lawsuit to include the 'Elon Musk Revocable Trust' as a defendant, thus transferring the settlement obligations from Musk personally to the trust.