Elon Musk and Brother Said to Be Under Investigation by SEC: Report

The U.S. Securities and Exchange Commission (SEC) has launched a probe into recent stock sales made by Tesla CEO Elon Musk and his brother Kimbal Musk, who is a member of Tesla’s board of directors, to determine whether the pair violated insider trading rules — reports The Wall Street Journal.

The investigation reportedly started last year and is targeting stock sales made by Kimbal Musk just one day before Elon Musk asked his 70+ million Twitter followers whether he should sell 10% of his Tesla stock in a poll.

With nearly 58% of the 3.5 million votes cast favoring ‘Yes,’ the Tesla CEO went on a share liquidation spree to pay off a $13.8 billion USD tax bill. As Musk dumped block after block of Tesla stock, the company’s share price took an expected beating.

According to financial filings, Kimbal Musk sold around $109 million USD worth of his Tesla shares the day before his CEO brother’s Twitter poll.

The results of Elon Musk’s Twitter poll are unlikely to have actually swung his decision. The Tesla CEO said in September 2021 that he was likely to exercise “a huge block” of his stock options in the fourth quarter, since they were set to expire in August 2022.

What’s more, selling off a portion of his stake in Tesla was the only way the CEO could have footed his massive tax bill. Even after liquidating billions in Tesla stock, Elon Musk still owns just over 21% of the company, according to a recent SEC filing.

Elon Musk and the SEC have a long and contentious history, but the two have been found locking horns quite regularly in recent weeks. Late last year, the SEC served Tesla with a subpoena over compliance with a settlement regarding Elon Musk’s controversial but “entirely truthful” 2018 tweet about taking Tesla private.

Last week, Tesla accused the SEC of harassing Elon Musk and the company with “unfounded investigations.” The SEC responded to the claims in a letter submitted to a federal judge on Friday. An attorney for Elon Musk on Monday also alleged that the SEC leaked information about the ongoing federal investigation into the 2018 tweet.