News Karnataka
Tuesday, October 04 2022
Business News

Elon Musk, his brother under US SEC probe for insider trading

Photo Credit : IANS

San Francisco: The US Securities and Exchange Commission (SEC) has opened an investigation into Elon Musk and his brother Kimbal Musk for allegedly violating insider trading regulations with recent share sales.

The Wall Street Journal reported that the regulator is investigating whether recent stock sales by the Tesla CEO and his brother “violated insider-trading rules”.

The SEC probe began last year after Kimbal sold 88,500 Tesla shares worth $108 million, “one day before the Tesla chief polled Twitter users asking whether he should unload 10 per cent of his stake in the electric-car maker and pledging to abide by the vote’s results”, the report said late on Thursday.

Kimbal, who also sits on Tesla’s board of directors, has frequently traded Tesla stock at regular intervals under a plan.

The regulators will now look into whether Musk told his brother about the poll or potential sale before Kimbal sold his shares on November 5, “or if Kimbal otherwise learned of the poll and then traded”, according to the report.

Musk sold more than $16 billion worth shares since early November when he polled Twitter users about offloading 10 per cent of his stake in the electric-car maker.

“Much is made lately of unrealised gains being a means of tax avoidance, so I propose selling 10 per cent of my Tesla stock,” he had posted.

In a tweet late on Thursday, Musk said that he was “building a case” against the SEC and declared, “I didn’t start the fight, but I will finish it.”

The conflict between Musk and the SEC began in September 2018 when the SEC charged Musk with making “false and misleading” statements to investors after he wrote on Twitter in August that he had secured enough funding for a massive private buyout of Tesla at $420 a share.

The stock seesawed all month and the deal Musk alluded to never materialised.

Musk and Tesla had to pay $20 million in fines each, and Musk was forced to step down as Chairman for at least three years as part of a revised settlement agreement the agency reached with the automaker and CEO in 2019.

Earlier this week, Musk (via his attorney) accused the US SEC of leaking information about a federal investigation in retaliation for his public criticism of federal financial regulators.

The letter came after Musk alleged that the SEC was engaged in harassment by continually investigating him, “trying to chill his right to free speech”.

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