The American stock market watchdog is starting to investigate Elon Musk and his brother Kimbal. They allegedly sold shares with insider information.
Elon Musk, the boss of Tesla, SpaceX and the Boring Company, among others, tends to be very straightforward on Twitter, and that is increasingly taking its toll. The Security and Exchanges Commission (SEC), the US stock exchange regulator, has launched a new investigation into Musk and his brother Kimbal over insider trading. Kimbal Musk had sold 88,500 shares in Tesla a day before Elon took the prices of those shares sharply down with a tweet.
The recent investigation revolves around actions in early November, reports The Wall Street Journal. Kimbal, who also sits on Tesla’s board of directors, is selling 88,500 Tesla shares on November 5 for about $108 million. A day later, Elon tweeted whether he should sell ten percent of his own Tesla shares. Elon packages the sale as a way to raise money to pay taxes and promises to stick to the poll’s outcome. At the end of the survey, about 58 percent of the participants say ‘yes’, and the price of Tesla shares falls sharply.
So the question is whether Elon has informed his brother about the plans. If so, he was breaking insider trading rules. Employees and board members of companies are not allowed to trade shares based on information that is not publicly known. Many board members start selling shares at set times through a predetermined plan to ensure that they don’t. The SEC says that Kimbal also has such a plan, but his sale of November 5 did not fit in with it.
Musk (Elon then) has been at odds with the SEC for some time, specifically about his Twitter traffic. For example, in 2018, the SEC started a case when Musk tweeted that he wanted to take his company off the stock exchange. Since then, he has had to have his tweets checked and approved. In 2019, however, he tweeted rosy forecasts around Tesla production numbers that the SEC said had not been approved, and it was again sued. Musk, for his part, sued the SEC this week for harassment because the regulator would target him.
