Elon Musk and Brother Face Trading Probe
As per media reports, Tesla CEO Elon Musk and his brother are being investigated by the Securities and Exchange Commission for possibly violating insider trading rules.
According to the Wall Street Journal, the investment company watchdog agency is investigating sales of Tesla shares by Kimbal Musk, a Tesla board member, even before his brother, Elon, posted on Twitter that he might sell 10% from his own Tesla holdings, a step which sent Tesla (TSLA) shares marginally lower as in days which followed.
Musk’s lawyers reportedly filed a complaint about Monday, alleging that the SEC leaked information about its investigation into Musk, but without specifying what those disclosures showed. The piece in the Journal that revealed the investigation was posted on Thursday.
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According to reports, the probe is focused on Kimbal Musk’s November trade of 88,500 Tesla shares, by which he received approximately $109 million.
At the time, the shares constituted around 15% of his Tesla holdings. Contrary to his brother Elon, who rarely sells the stock, Kimbal Musk has sold stock frequently.
It’s unclear whether Elon Musk’s choice to exercise his choices and sell shares or his intentions for a Twitter poll will be considered corporate knowledge and susceptible to insider trading regulations.
Tesla, Musk, and the agency came to a deal in 2018 after Musk deceived investors in a tweet that said he had “funding secured” to take Tesla private when he had conversations and not the funds.
Musk eventually abandoned his intentions to take Tesla private. Tesla’s stock is now worth about ten times what Musk was proposing to take the company private.
Musk was obliged to relinquish his position of Tesla chairman as part of the 2018 arrangement, called a consent decree, albeit he kept his CEO title. Musk and Tesla were both fined $20 million, but also Musk was obliged to have his tweets regarding material, corporate information vetted before they were posted.
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