Tesla boss Elon Musk and his brother Kimbal Musk, who sits on the electric vehicle company’s board of directors are being investigated by the Securities and Exchange Commission (SEC) on chances that their recent stock sales violated insider trading rules.
While shares of the company plunged briefly on the news, the company’s stock went up more than 4 percent in afternoon trading.
According to reports, the probe into the stock sales by the Tesla executives kicked off last year and is focused on Kimbaln Musk’s stock sales which happened shortly before Elon Musk asked his Twitter followers via a poll if he should sell his Tesla holdings.
According to SEC filings, Kimbal Musk sold $109 million of his Tesla shares.
While the SEC has refused to respond to requests for comments, Elon Musk accused the SEC of leaking information. He wrote that “The SEC leaked confidential information to the WSJ, deliberately violating federal law. We found out about this because, in their eagerness to gain a scoop, WSJ jumped the gun and inquired about it with Tesla before, rather than after, SEC publication.”
Tesla’s stock has been climbing since last year on its adoption of Bitcoin as a means of payment, its announcement that Hertz was ordering 100,000 Tesla vehicles, impressive quarterly earnings, etc. While the billionaire asked his Twitter fans to help him make a decision regarding his stock via Twitter, he already intimated that he was going to sell a “huge block” of his options in the fourth quarter during an appearance at Code Conference. He also added that the sale would cover his tax bill.
According to public filings, many of these insider transactions carried out by Elon Musk were included in a “Rule 10b5-1” trading plan dated the 14th of September, 2021, which allows company insiders to execute trades in their company’s stock for a specified later date.
Elon Musk who recently accused the SEC of “unrelenting investigation” amounting to harassment and retaliation against him for criticizing financial regulations, have been in a battle with the SEC for quite sometime now. He was charged with civil securities fraud in 2018 and the SEC demanded he relinquished his role as chairman of Tesla’s board for three years.