Elon Musk's lawyers negotiated a potential settlement of his SEC Twitter stake case without involving the regulator's legal team, court records reveal. Judge Sparkle Sooknanan expressed surprise when Musk's counsel Sarah Concannon confirmed settlement talks were ongoing without SEC lawyers being "fully read in." The unusual approach raised questions about potential backchannel communications with Trump administration officials.

The case centers on Musk's failure to properly disclose his Twitter stake, which allegedly violated securities law and secured him a $150 million discount on additional stock purchases. Musk's $44 billion Twitter acquisition closed in October 2022, and he has since renamed the platform X. The SEC's enforcement director, Margaret Ryan, abruptly resigned just days after Musk and the SEC filed a joint motion to extend settlement discussions.

Musk has a contentious history with the SEC, previously calling it the "short seller Enrichment Commission." His latest maneuver comes as new SEC chair Paul Atkins scraps much of the agency's enforcement agenda. The settlement discussions occur amid a shareholder lawsuit against Musk in San Francisco, where investors claim they lost money after Musk threatened to abandon the Twitter deal.