A federal judge on Wednesday authorized a consent judgment, putting an end to a Securities and Exchange Commission (SEC) lawsuit against Elon Musk over his alleged failure to, in a timely manner, disclose stock purchases in Twitter ahead of his 2022 takeover of the social media company.
The ruling submits the trust to a permanent injunction against future violations of the disclosure rule. The SEC will in turn revoke all claims against Musk personally as part of the deal.
Attorneys for Musk did not immediately return a request for comment.
The settlement settles litigation that started in January 2025. The SEC accused Musk of violating federal securities regulations by not filing a beneficial ownership report after he eclipsed a 5 percent holding of Twitter shares on March 14, 2022, triggering a 10-day deadline to make the holding public.
The SEC alleged the delay enabled him to continue purchasing shares at artificially low prices, underpaying by at least $150 million while other investors sold at depressed prices and suffered economic harm.
The court had previously rejected Musk’s motion to dismiss the case in February 2026. After discovery began, the parties negotiated a resolution.
In May 2026, the SEC filed an amended complaint with Musk’s consent that added the Elon Musk Revocable Trust Dated July 22, 2003, as a defendant.
The trust, governed by Nevada law at the time of the alleged violation and now by Texas law, funded the purchases and held the Twitter shares. Musk is its sole grantor, trustee, and beneficiary. The SEC noted that the trust is the largest holder of Tesla stock, with holdings valued at more than $180 billion.
Under the consent judgment, the trust, not Musk personally, faces the injunction and penalty. The SEC stopped its earlier request for disgorgement of the alleged $150 million in unjust enrichment, pointing toward limited historical success in obtaining such relief in Section 13(d) cases. The judgment binds the trust’s officers, agents, employees, attorneys, and others acting in active concert or participation with it.
Sooknanan authorized the settlement despite concerns about structure and timing. She raised several red flags, such as the late addition of the trust after Musk had moved to join it as a party, the filing of the amended complaint just three minutes before the consent judgment motion, and the fact that the deal seemed to be designed to let Musk claim no personal relief had been entered against him.
“If the Trust is an alter ego or some extension of Mr. Musk, why isn’t relief running against Mr. Musk, as opposed to the Trust?” the judge remarked during a May 13 status conference. She further observed that the structure “seemed as though ‘the Trust [was] being brought in for the sole purpose of Mr. Musk being able to say that no relief was entered against him in his personal capacity.’”
Sooknanan nonetheless concluded the agreement met the legal standard for approval. A court reviewing a consent judgment “is not a rubber stamp. But neither is it an ombudsman,” she wrote. “This Court is limited to evaluating whether the proposed consent judgment meets minimum standards of fairness and reasonableness, or whether it instead ‘make[s] a mockery of judicial power.’”
The judge found the penalty and injunction sufficient to advance the public disclosure purposes of Section 13(d), even without personal liability for Musk or disgorgement.
“Whether the Executive Branch (through the SEC) has done enough to hold Mr. Musk to account for his alleged violation, like many other issues, is for our citizenry to decide at the ballot box,” Sooknanan wrote.