Topline
The Securities and Exchange Commission is investigating whether Tesla CEO Elon Musk and his younger brother, Kimbal, violated insider trading rules when Kimbal Musk sold $108 million worth of his shares in the automaker just before Elon Musk pledged to sell 10% of his stock amid criticism that he was avoiding taxes, according to the Wall Street Journal.
GRUENHEIDE, GERMANY – SEPTEMBER 03: Tesla head Elon Musk leaves after giving a statement to the … [+]
Key Facts
Kimbal Musk sold 88,500 shares of Tesla, where he serves on the board of directors, on November 5—one day before his billionaire brother sent out a Twitter poll asking his followers if he should sell 10% of his stock, to which 58% of more than 3.5 million voters said “yes.”
Following the poll, Elon Musk obliged and began selling stock—and the price dropped dramatically.
The SEC began investigating last year whether Kimbal Musk knew his brother would be selling his shares before the poll was posted, according to the Wall Street Journal’s unnamed sources.
The Wall Street Journal noted that Kimbal Musk did not file his sale using a 10b5-1 plan—a preset trading plan that allows officers and directors of companies to trade at predetermined intervals and avoid insider-trading charges—despite having often used such a plan in the past when trading Tesla stock.
The SEC declined Forbes’ request for comment on the Wall Street Journal’s report.
Musk and Tesla did not immediately respond to Forbes’ requests for comment.
Key Background
Kimbal Musk has been on the Tesla board since 2004. Forbes conservatively estimated in November, after his massive sale, that he was worth $700 million, owning a 0.04% stake in the company. He likely has a stake in SpaceX, where he also holds a board seat. In 2018, a group of Tesla shareholders cried nepotism, arguing Kimbal’s connection to Elon complicated his role as an independent director and pointing out that he “has no professional experience in the auto industry.”
Tangent
In 2018, Elon Musk and Tesla reached a settlement with the SEC in 2018 worth $20 million after it accused him of misleading shareholders by tweeting he might take Tesla private. A federal judge also forced Musk to step down as the company’s chairman.
Big Number
$220.2 billion. That’s how much Elon Musk is worth according to Forbes’ real-time wealth tracker, making him the richest person in the world. He owns 23% of Tesla, the world’s most valuable automaker, and roughly 48% of SpaceX, which was valued at more than $100 billion as of October.
Source: https://www.forbes.com/sites/masonbissada/2022/02/24/sec-reportedly-probing-elon-musk-and-brother-over-tesla-stock-sales/