Musk agrees to pay US$1.5 million over Twitter share buying
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WASHINGTON: Elon Musk on Monday (May 4) agreed to pay a small amount to end a government lawsuit that accused him of breaking stock market rules when he was secretly buying up shares of Twitter before his US$44 billion takeover of the social media platform in 2022.
Musk's trust will pay a US$1.5 million fine under the deal, which was filed in a Washington federal court and still needs a judge's approval.
The case involves Musk's missing a statutory deadline for notifying regulators as he bought more and more Twitter shares ahead of the takeover.
Musk's attorney Alex Spiro cast the outcome as a vindication, saying his client "has now been cleared of all issues related to the late filing of forms in the Twitter acquisition, as we said from the outset he would be".
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"A trust vehicle has agreed to a small fine for being late on one filing," Spiro said.
In an email to AFP, Spiro added that the deal with the US government was not a settlement "because he did nothing wrong".
"The case against him was dismissed," Spiro said.
The case centred on a simple rule: when an investor buys more than 5 per cent of a publicly traded company, they are required by law to disclose that stake within 10 days.
The Securities and Exchange Commission (SEC), the federal agency that polices financial markets, in January 2025 said Musk blew past that deadline by 11 days when he was building up his position in Twitter in early 2022.
The SEC said Musk's delay allowed him to keep buying at bargain prices, saving himself an estimated US$150 million at the expense of other shareholders who sold without knowing what was happening.
Despite those allegations, the deal with the SEC does not require Musk to pay back any of those savings.
His trust agreed only to the US$1.5 million penalty and a promise not to violate the same rule again - without admitting he did anything wrong.
The SEC said it amended its complaint to add Musk's trust as a defendant and filed the proposed settlement at the same time.
If the judge signs off, the agency said it will drop Musk personally from the case, ending it entirely.
The lawsuit was first filed just days before then-President Joe Biden left office.
Musk, a close ally of President Donald Trump at the time, tried to get it thrown out, but a federal judge rejected that effort in February.
The fine comes on the heels of a separate trial in California, where a jury in March found that Musk had misled Twitter investors with misleading posts during the chaotic 2022 takeover.
Damages in that case could reach roughly US$2 billion, although Musk's lawyers have said they plan to appeal.
It is the second time Musk has settled with the SEC.
In 2018, he paid US$20 million and gave up his role as Tesla's chairman after claiming on social media that he had the funding to take the electric car maker private - a deal that never materialised.
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