Musk Settles. Violation earned him $150 Million, Fine is $1.5 million

Look, we understand, it was not fraud, it is a reporting violation, but what is the point of financial penalties if they do not have any impact on the defendant, or have no relationship to the amount of benefit he received?

Musk purchased Twitter for $44 billion in a leveraged buyout in late 2022. Prior to his purchase of Twitter, Musk built up a position of greater than 5% in the company, which was publicly traded. At that level, Musk was required to disclose his holdings to the public within 10 calendar days of reaching the 5% threshold.

However, perhaps using the Trump mantra that it is better to ask forgiveness than to ask for permission, Musk was late in filing the disclosure. The SEC estimated in its complaint that Musk underpaid Twitter investors by more than $150 million during the period.

The SEC settled with him, and without admitting or denying the allegations Musk agreed to pay the government $1.5 million dollars for the violation.

However, last week, a jury in California found that Musk defrauded Twitter shareholders during the runup to his $44 billion acquisition of the social media company, according to a verdict issued on Friday. Total damages could reach up to $2.6 billion, attorneys for the plaintiffs said.