A judge could yet tear up Elon Musk’s settlement with the SEC

  • A US federal judge has demanded Elon Musk and the Securities and Exchange Commission (SEC) justify their settlement over the Tesla privatisation fiasco.

  • Judge Alison Nathan said the court needs to see justification that the settlement is "fair and reasonable."

  • Musk and the SEC have been given a week to submit a joint letter to explain why the deal should be cleared.

Elon Musk's settlement with the SEC is not finalised yet.

US District Court Judge Alison Nathan asked on Thursday that both Musk and the SEC supply justification for the settlement reached over the Tesla privatisation fiasco.

Musk did a deal with the SEC on September 29, consisting of a $20 million fine and a ban precluding him from acting as chairman of Tesla for at least three years.

But Judge Nathan said the court needs to see evidence that the deal is "fair and reasonable, with the additional requirement that the public interest not be disserved," CNBC reports.

Judge Nathan asked that Musk and the SEC submit a joint letter explaining why she should approve the settlement — and set a one-week time limit.

A former federal prosecutor told CNBC that while the request is unusual, it is not unheard of. "It's odd given the nature of this settlement. If there is a class action, it's common. But just for SEC enforcement action, particularly with a big fine, it's unusual," Jay Hulings said.

On the same day, Musk mocked the SEC on Twitter, calling it the "Shortseller Enrichment Commission."

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