The investigation is escalating the existing tension between Musk and the SEC that has recently accused Tesla CEO of discrimination of employees.
Elon Musk and his brother Kimbal Musk seem to be in hot water as The US Securities and Exchange Commission (SEC) has started an investigation into the recent sales of Tesla Inc (NASDAQ: TSLA) stock. According to SEC, Elon Musk and his brother might have violated insider trading rules.
The news has caused Tesla shares to drop after hours. TSLA stock’s closing price on Thursday totaled $800.77 per share, but in the prolonged trading, TSLA stock slightly plunged by 1.08% to $792.15. Tesla’s market cap is $827.604 billion, year-to-date, TSLA stock is 24.23% down.
Background for SEC’s Allegations
The SEC investigation into Tesla stock sales started back in November 2021, after Elon Musk’s brother Kimbal Musk sold $108 million worth of Tesla shares. The next day after the sale, Elon Musk posted a poll on his Twitter asking whether he should sell 10 percent of his stake in the company. The results of the poll showed that the majority (57.9 percent, or more than 3.5 million participants) had chosen “yes”, and 42.1 percent voted “no.”
The thing is Kimbal Musk, a member of Tesla’s board of directors, sold Tesla stock before Elon Musk created a poll. Meanwhile, insider trading laws prohibit employees and board members from trading based on information that has not been made public.
According to Elon Musk, Tesla lawyers were aware of his intention to conduct the poll. However, this information is not confirmed.
Ten days after it happened, SEC issued a subpoena to Tesla asking for additional financial information. Currently, SEC is proceeding with the investigation.
The Wall Street Journal was the first to report on the allegation against Elon Musk. Musk said:
“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.”
The investigation is escalating the existing tension between Musk and the SEC that has recently accused Tesla CEO of discrimination of employees.
Elon Musk’s Battle with the SEC
The first time Musk faced reprisals from the SEC for his online activity was back in 2018 when he revealed on Twitter he intended to take Tesla private and had “funding secured.” At that time, the SEC called his Tweets misleading. Besides, the regulator mandated his social media activity be overseen. The SEC and Tesla even made an agreement according to which the company’s lawyer should pre-approve tweets made by Musk about Tesla’s financial health, sales, or delivery numbers.
Further, in 2019, the SEC asked a federal judge to hold Musk in contempt of that agreement for sending out an inaccurate tweet.
On Thursday, Musk made a statement about building a case against the SEC.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.
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