It has been reported by the Wall Street Journal that the U.S. Securities and Exchange Commission is investigating whether the recent sale of shares by Tesla CEO Elon Musk and his brother Kimbal Musk violated insider-trading rules.
The report, hidden behind a paywall, claims the investigation began last year after Kimbal sold shares valued at $108 million. It is reported these Tesla shares were sold a day before Elon ran a poll on Twitter asking whether he should offload 10 per cent of his stake in Tesla.
“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” Musk tweeted at the time.
“I will abide by the results of this poll, whichever way it goes,” Musk continued.
The unscientific poll attracted about 3.5 million responses and while the results showed that 57.9 per cent of respondents believed Musk should sell, he didn’t actually unload 10 per cent of his shares, instead selling roughly 3 per cent.
As the BBC notes, roughly one-fifth of the total shares Musk sold were already scheduled to be sold before the billionaire’s Twitter poll. The rest, while not necessarily a direct result of the poll, seemed to have been sold after Musk signalled his interest in unloading a lot of shares.
According to the Financial Times, Kimbal did not know about Elon’s Twitter poll ahead of it, telling them his lawyers were “aware” of the poll.
As reported by Reuters, the SEC issued a subpoena on November 16, which was 10 days after Musk’s poll, seeking information related to some financial data. They also noted the potential probe would escalate Musk’s existing battle with regulators as they scrutinise his social media posts and Tesla’s treatment of workers.
Tesla, Elon, Kimbal or the SEC are yet to comment.