Kimbal Musk (AP)
The Securities and Exchange Commission is investigating whether Tesla CEO Inc. Elon Musk and his brother Kimbal broke securities laws by selling shares in the company late last year, according to a person familiar with the matter.
The regulator’s poll focused on deals comes just before Elon polls Twitter followers to ask if he should sell a 10% stake in the company. . The SEC is looking into whether any insider trading rules were violated, said a person familiar with the matter, who requested anonymity because the investigation is private.
The SEC declined to comment. Tesla, Elon and Kimbal did not immediately respond to requests for comment. The poll was previously reported by The Wall Street Journal.
Tesla shares tumbled after the Nov. 6 poll, closing their biggest drop in five months. Kimbal, a Tesla board member, sold 88,500 Tesla shares worth about $109 million on November 5, according to a filing later that day after the market closed.
Earlier this month, Tesla revealed that it received a subpoena from the SEC on November 16 seeking information about its governance processes and compliance agreement it reached with the agency in September. 2018 via Elon Musk’s tweet.
As part of that settlement, Tesla pledged to put in place controls to monitor the CEO’s communications – including his tweets – after the SEC accused the world’s richest man of having securities fraud by saying on social media platforms that he had secured funding for the company to go private.
Musk and the SEC have been in a quandary ever since. The agency sought to have a judge find the billionaire contempt settlement earlier this year after he tweeted about Tesla’s production prospects without receiving prior approval. The two sides agreed in April 2019 to amend their agreement by adding specific topics that Tesla directors cannot tweet or communicate in writing without being moderated by the company’s attorneys.
The dispute flared up last week when Musk’s attorney told federal court that the SEC was targeting Musk and tram producer with a “relentless investigation” because the CEO is “an outspoken critic of the government.” The SEC denied the allegation, and on Thursday a judge declined to hold a hearing on the claims.
