Tesla CEO Elon Musk‘s settlement with the Securities and Exchange Commission hit a snag Thursday after the federal judge charged with approving it asked them to justify the agreement.
U.S. District Judge Alison Nathan said the court needs to make a “minimal determination of whether the agreement is appropriate” before he would sign off on the deal. She said the law requires her to determine whether the enforcement action is “fair and reasonable, with the additional requirement that the public interest not be disserved.”
The judge gave them a week to submit a joint letter explaining why she should approve it.
Former federal prosecutor Jay Hulings said the order was unusual, “but not unheard of.”
“It’s odd given the nature of this settlement. If there’s is a class action, it’s common. But just for SEC enforcement action, particularly with a big fine, it’s unusual,” he said.
Musk and the SEC reached a settlement on Saturday, just days after the agency filed a lawsuit alleging that Musk misled investors about having the funding necessary to take Tesla private.
This story is developing. Check back for updates.