Elon Musk and his brother Kimbal Must are being investigated by the Securities and Exchange Commission for alleged insider trading.
Regulators have been investigating whether Elon Musk misled investors with a tweet that said he had the funding to take Tesla private. But the question remaining is whether Elon Musk told his brother about that tweet or the timing of his sales before Kimbal Musk traded on Nov. 5, according to reports, including from The Wall Street Journal. Kimbal Musk also serves on Tesla’s board of directors.
The SEC did not immediately respond to TheWrap’s inquiry.
Last November, Kimbal Musk sold shares of Tesla valued at $108 million — a day before Elon Musk posted to Twitter asking if he shiuld unload 10% of his stake in the company. He then started selling stock amounting to billions in the following days. And in February 2021, Kimbal Musk also sold $25 million of his stock at about $852 per share. Tesla share prices declined some 33% since that period.
Kimbal Musk’s trading potentially violates rules that prohibit employees and board members of a company from trading based on any nonpublic information. They cannot buy or sell shares if they have access or been made aware of undisclosed material information.
The civil investigation could ultimately lead to formal allegations of wrongdoing, though, the SEC has closed investigations and not taken enforcement action before.