October 1, 2022

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Elon Musk investigated after stock sale - E24

Elon Musk investigated after stock sale – E24

The US Financial Services Authority suspects that Elon Musk’s brother broke internal rules after he sold shares before Elon posted a poll on Twitter.

Tesla chief Elon Musk.

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Tesla founder Elon Musk and his brother are under investigation by the US Financial Services Authority after the stock sale, Bloomberg and The Wall Street Journal Thursday night.

The SEC investigation began last year after the brother of Tesla CEO Kimbal Musk sold $108 million worth of Tesla stock.

The day before, Musk asked his Twitter followers if he would sell ten percent of the company’s stock. Musk began selling billions of dollars in stock a few days after he posted the ad. Following Musk’s questions to his followers, 58 percent voted for him to sell the stock. Hence, this was considered negative news for the stock.

Kimbal Musk, sold 88,500 shares the day before the Tesla boss announced a potential sale to him.

Thus, the question is whether Musk had told his brother that he would post the message on Twitter, or whether Kimbal Musk had been informed in advance of the vote and thus the stock sale.

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It may be a violation of internal rules

If Kimbal Musk knows his brother will post the update on Twitter, this could be a violation of internal rules. These rules prevent employees and board members, as well as related parties, from acting on information that has not been published.

Insiders can avoid insider trading fees if they buy or sell under a previously announced plan called “10b5-1” in the US system. They can trade in this, provided they don’t change the plan when they have important information that hasn’t been released.

However, a document submitted to the US Financial Services Authority shows that Kimbal Musk did not use such a scheme for these deals.

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