Elon Musk’s judge has ‘significant misgivings’ about $1.5 million Twitter settlement—but approves it anyway

A federal judge questioned the propriety of the U.S. Securities and Exchange Commission’s $1.5 million settlement with Elon Musk, in a case alleging that the world’s richest person saved $150 million by allegedly skirting stock disclosure rules at public market shareholders’ expense.

But despite what she called “serious misgivings” and “red flags,” Washington, D.C. district court judge Sparkle L. Sooknanan signed off on a settlement whose terms even the SEC has admitted are unprecedented.

The settlement will see Musk’s trust—and not him—pay the $1.5 million civil penalty related to his 2022 takeover of Twitter, the social media site now known as X.

The SEC admits that it has never before “settled a Section 13(d) violation with a trust without the trustee or beneficiary,” judge Sooknanan wrote in a 12-page ruling Wednesday. And, she added, “the Trust seems like a particularly odd candidate for the SEC to break that new ground—after all, as mentioned, the Trust is a revocable trust with Mr. Musk as its sole trustee and beneficiary.”

Sooknanan then cited an article that states, “A revocable trust is basically just the settlor’s brokerage account in different clothes.”

The SEC previously told the court the trust in question is “the largest holder of Tesla stock in the world,” and valued at more than $180 billion. In addition to being the CEO of Tesla for 17 years, Musk is also the founder of SpaceX, which went public last month in the largest-ever IPO at a nearly $2 trillion valuation.

Despite her reservations with the settlement, Sooknanan’s ruling seemed to suggest her hands were tied. The court is........

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