A U.S. federal judge said on Wednesday that he would not immediately approve Elon Musk's settlement agreement with the U.S. Securities and Exchange Commission (SEC) because of "red flags" in the agreement, the Financial Times reported.
Caption: Musk
Previously, Musk was willing to pay $1.5 million to reach a settlement with the SEC to resolve a lawsuit regarding Twitter's stock disclosure issues.
However, U.S. District Judge Sparkle Sooknanan said she would not "routinely approve" the settlement, saying some elements of the agreement "make me alarmed."
"Did Musk get some kind of special treatment in this case?" she asked.
Suknanan also suggested that Musk may be trying to avoid a court ruling against him and asked both parties to submit their briefs to her again before she makes a decision on the settlement.
The proposed settlement was reached between the SEC and Musk. Musk is a major donor to U.S. President Trump and a former member of his administration. Previously, the SEC has adopted a relatively relaxed attitude towards many people and companies close to Trump.
Musk’s lawyers have previously disclosed that the SEC’s enforcement lawyers were not “fully aware” of the settlement agreement. In March, just days after the disclosure, Margaret Ryan, head of the SEC's enforcement division, resigned.