The US Securities and Exchange Commission is investigating whether recent share sales by Tesla chief executive Elon Musk and his brother Kimbal Musk violated insider trading rules, the Wall Street Journal reported Thursday, citing people familiar with the matter.
The investigation began last year after Kimbal, a Tesla board member, sold $108 million worth of shares in the electric car maker.
It came the day before Musk polled Twitter users asking if he should sell his 10% stake in Tesla.
US market regulators are looking into whether Tesla CEO Elon Musk and his brother violated insider trading rules in connection with the sale of shares last year
Tesla’s share price plummeted after Elon Musk posted a poll on Twitter asking if he should sell 10 percent of his stake in the company.
Kimbal Musk didn’t know about the Twitter poll before him, Elon Musk told the Financial Times in an email, adding that his lawyers “knew” about the poll.
Tesla shares plummeted after Musk’s Twitter poll.
A previous agreement with the SEC required his public statements about company finances and other topics to be reviewed by legal counsel from the federal financial regulator.
On November 16, ten days after Musk’s debriefing, the SEC issued a subpoena requesting information related to some financial data.
The investigation is looking into whether Elon Musk told his brother he would post the tweet and if Kimbal Musk traded after that, the Journal reports.
The statement said that Kimbal donated 25,000 shares to charity in addition to selling 88,500 shares. After the sale, he still owned 511,240 shares.
The Securities and Exchange Commission launched an investigation after Kimbal Musk (pictured) sold $108 million worth of Tesla shares last year.
Tesla and SpaceX CEO Elon Musk hugs his brother Kimbal Musk during an event in Florida, May 2020.
Employees and managers of a listed company generally should not buy or sell securities if they know information that has not yet been made public.
The potential investigation will intensify Musk’s fight with regulators as they scrutinize his social media posts and Tesla’s treatment of workers, including allegations of discrimination.
The world’s richest man is already in open conflict with the SEC over a 2018 tweet in which he claimed he had the funding to take Tesla off the stock market without providing proof.
Thanks to his Twitter presence, the CEO often makes jokes, coupled with subtle references to marijuana.
One of his most memorable tweets came in August 2018 when he said he was “considering a $420 Tesla privatization.” Funding secured.”
This led to criticism of his impulsive use of Twitter, and he was accused of fraud by the SEC for misleading investors. Musk and Tesla were fined $20 million each.
The number 420 is cannabis culture slang for the use of marijuana.
Elon Musk’s presence on Twitter has led to the CEO often making jokes with subtle references to marijuana and drugs.
In this case, Musk and Tesla agreed to pay $20 million each as part of a settlement that also imposed strict rules on his use of social media, requiring prior approval by Tesla’s adviser of statements containing key financial information.
A Tesla lawyer rekindled the battle over the settlement by sending a letter to the judge last week accusing the SEC of pursuing him and Tesla with an “endless” and “relentless” investigation to punish him for outspoken criticism of the government.
The letter also accuses the SEC of delaying the distribution of $40 million to investors while cracking down hard on Musk’s use of social media.
Elon Musk’s stock sale in November was automatically executed in accordance with the trading plan he created on September 14 and showed a share sale report, including stock options that were due to expire in 2022.
Tesla shares have fallen about 33% since Musk began selling billions of dollars of stock on Nov. 8, days after a poll in which 58% of voters asked him to sell.
Tesla and Kimbal Musk did not comment on the report. The SEC declined to comment.
Tesla shares fell for the fifth day in a row on Thursday morning to $700 a share, the lowest valuation since August, amid a global market sell-off fueled by fear of a Russian occupation that began early Thursday morning. It has since recovered to $768 per share as of Thursday afternoon and continues to hover around that mark.
One billionaire and two millionaires is not bad for a mother of three. Indeed, Mae Musk’s mother’s successful children – Elon, Kimbal and Tosca, not pictured – have all founded companies and are leaders in their chosen fields: technology, restaurants and entertainment.