Elon Musk and brother under investigation for alleged insider trading
The US Securities and Exchange Commission has reportedly opened an investigation into whether recent stock sales by Tesla CEO Elon Musk and his brother Kimbal Musk violated insider trading rules.
The SEC inquiry – first reported by the Wall Street Journal on Thursday – was sparked in part by the Tesla CEO’s own tweets.
It centers on an incident last year when Kimbal – who sits on Tesla’s board of directors – sold $108m of shares in the electric carmaker. The exchange took place just a day before before Musk polled Twitter users asking whether he should offload 10% of his stake in Tesla, sending shares falling.
The SEC issued a subpoena to Tesla 10 days later on 16 November seeking additional financial information.
Insider trading laws prohibit employees and board members from trading based on non-public information about a company. The investigation likely will focus on whether Kimbal sold his shares because Elon told him about the poll in advance.
The investigation escalates Musk’s battle with regulators as they scrutinize his social media posts and Tesla’s treatment of workers, including accusations of discrimination.
Last week, Tesla and Musk accused the SEC of harassing them with an “endless” and “unrelenting” investigation to punish Musk for being an outspoken critic of the government.
It’s hardly the first time Musk’s tweets have gotten him in trouble with regulators. Musk first experienced reprisals from the SEC for his online activity when in 2018 he tweeted he intended to take Tesla private and had “funding secured”. The SEC ruled that Musk’s tweets were misleading and mandated his social media activity be subjected to more oversight.
In 2019, the SEC in 2019 asked a federal judge to hold Musk in contempt of that
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