New Delhi: An investigation has been launched by the US Securities and Exchange Commission (SEC) to see whether recent stock sales by Tesla Chief Executive Officer (CEO) Elon Musk and his brother Kimbal Musk ‘violated insider trading rules’, Reuters reported quoting the Wall Street Journal on Thursday.
The probe began last year after Kimbal sold shares of the electric carmaker valued at $108 million, a day before Musk polled Twitter users asking whether he should offload 10 per cent of his stake in Tesla, the report mentioned.
Elon Musk in an email to Financial Times said that Kimbal Musk did not know about the Twitter poll ahead of it, adding that his lawyers were ‘aware’ of the poll.
An earlier settlement with the SEC required his public statements about the company’s finances and other topics to be vetted by its legal counsel.
On November 16, the SEC issued a subpoena (a writ ordering a person to attend a court), 10 days after Musk’s poll, seeking information related to some financial data.
The potential investigation would escalate Musk’s legal battle with regulators as they scrutinise his social media posts and Tesla’s treatment of workers, including accusations of discrimination.
Last week, the Tesla CEO accused the SEC of harassing him and Tesla with an ‘endless’ and ‘unrelenting’ investigation to punish him for being an outspoken critic of the government.
Elon Musk’s share sales in November were automatically executed, according to a trading plan he had created on September 14, showed a filing disclosing share sales, including stock options that were supposed to expire in 2022.
Tesla’s stock has fallen about 33 per cent since Musk began selling shares worth billions of dollars on November 8, few days after the poll where 58 per cent of voters asked him to sell.
Tesla and Kimbal Musk, however, did not immediately respond to Reuters’ requests for comment. A spokesperson for the SEC declined to comment.