Technology

Elon Musk and his brother under SEC investigation over share sales

Tesla founder says brother had ‘no idea’ about Twitter poll before selling shares

Elon Musk’s lawyers accused the SEC of mounting a harassment campaign against him earlier this week. Photograph: Jim Watson/AFP

Richard Waters
Fri Feb 25 2022 - 13:38

Tesla chief executive Elon Musk has denied passing information that could have hurt the company's stock price to his brother Kimbal, after a report that both men have become the subject of an insider trading investigation by US regulators.

The US Securities and Exchange Commission (SEC) is inquiring about a sale of the electric car company's shares by Kimbal Musk the day before his brother launched a poll on Twitter in November over whether he should divest a large slice of his own holding in the company, the Wall Street Journal reported on Thursday.

Tesla’s share price fell 5 per cent on the first trading day after the poll, which saw a majority of participants backing the proposal to sell.

Responding to an inquiry from the Financial Times, Mr Musk said in an email: “Kimbal had no idea I was going to do a Twitter poll.”

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He also claimed Tesla’s lawyers were “aware” he was going to conduct the poll. The characteristically unconventional move had raised questions over whether Mr Musk had notified the company’s lawyers, as he was required to do by an earlier settlement with the SEC.

The report of an investigation came days after Mr Musk’s lawyers accused the SEC of mounting a harassment campaign against him.

“The idea that I would care about whether my brother might sell shares for a few million dollars less when my Twitter poll caused my own share sale to be over a billion dollars less is utterly absurd,” Mr Musk said.

In an apparent reference to the vendetta he has accused the SEC of, Mr Musk added that the investigation was “simply more evidence of Stevie grinding his very tiny axe yet again”.

An SEC letter to court dated February 18th denying any harassment was signed by Steven Buchholz, a regional enforcement director for the regulator. The SEC declined to comment.

Kimbal Musk sold 88,500 Tesla shares worth about $108 million in total (€89 million) the day before the Twitter poll was announced. He could not immediately be reached for comment. - Copyright The Financial Times Limited 2022

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