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Lawyers for Elon Musk sought to negotiate a settlement of a Securities and Exchange Commission case accusing him of failing to properly disclose his Twitter stake without involving the Wall Street watchdog’s lawyers, court records show.
At a hearing on the case in Washington federal court earlier this month, Sarah Concannon, a lawyer for Musk, informed the judge that settlement negotiations over the case had been ongoing for some time, but that opposing lawyers from the SEC “were not fully read in on that”.
The judge, Sparkle Sooknanan, reacted with apparent surprise, according to a transcript of the hearing, asking: “Your colleagues at the SEC were not read in to discussions to resolve the case?” She repeated the question moments later.
It was not clear who Musk’s lawyers had been holding settlement talks with. Excluding the agency that filed the case from settlement discussions would be unusual, and the exchange raises questions about whether Musk or his lawyers were tapping relationships with other officials in the Trump administration in an effort to dispense with the case.
Musk, the billionaire founder of Tesla, xAI and SpaceX, was a top ally of Donald Trump and leading voice for his re-election campaign, and led the president’s effort to make government more efficient, before a public fallout and subsequent reconnection in recent months.
A person familiar with the talks denied the White House was involved and said discussions were held with higher echelons of the SEC.
Musk and the SEC on Tuesday filed a joint motion in the case to extend a filing deadline, because the “parties are engaged in discussions of a potential resolution that would mean further proceedings might not be necessary”, according to court documents.
The filing comes one day after Margaret Ryan, the SEC’s enforcement director, abruptly resigned from her role after seven months.
The SEC last year sued Musk for not disclosing the ownership stake he amassed in Twitter under a required timeline, a move that allegedly violated US securities law and helped him achieve a discount of at least $150mn on additional stock purchases.
During the March 4 hearing, Concannon told the court that parties had “made progress” on a potential resolution, and that long delays in the case were due to the settlement discussions.
The statement appeared to baffle Sooknanan, who asked Concannon repeatedly about the SEC not being involved in the discussions.
“It’s odd that you’re telling me that discussions are ongoing to resolve the case that counsel’s not aware of,” she said. Concannon asked for a sidebar to explain the matter outside the earshot of the rest of the courtroom, but the judge demurred.
The White House and the SEC did not immediately respond to a request for comment. A spokesperson for Quinn Emanuel, the law firm representing Musk, declined to comment on behalf of Concannon and another lawyer for the Tesla boss, Alex Spiro. Ryan did not respond to requests for comment.
Musk’s $44bn take-private deal for Twitter closed in October 2022. He has since renamed the social media site X. At the time the case was filed, a lawyer for Musk said he had “done nothing wrong and everyone sees this sham for what it is”.
The lawsuit was filed under former SEC chair Gary Gensler, who was appointed by then president Joe Biden, just days before Trump’s return to the White House on January 20 2025.
Paul Atkins, Gensler’s Trump-appointed successor, has scrapped much of his enforcement agenda, dropping a number of cases and investigations targeting crypto platforms. He also told the FT he would give businesses notice of any technical violations before regulators “bash down their door”.
Tensions between Musk and the SEC have over the years spilled out into the open, as the agency filed multiple lawsuits against the world’s richest man. Musk has frequently taunted the regulator on X, at one point calling the SEC the “short seller Enrichment Commission”.
He is also being sued in San Francisco by a group of shareholders who allege they lost money after the billionaire threatened to walk away from the Twitter deal, despite knowing he would be legally compelled to complete the buyout. Closing arguments in the trial began on Tuesday.