The Securities and Exchange Commission is investigating whether Tesla Inc. Chief Executive Officer Elon Musk and his brother Kimbal violated securities laws when selling shares in the company late last year, according to a person familiar with the matter.
The regulator’s probe is focused on transactions that took place just before Elon polled his Twitter followers asking if he should sell a 10% stake in the company. The SEC is looking into whether any insider trading rules were violated, said the person familiar with the matter, who asked not to be named because the probe is private. The potential investigation would escalate Musk’s legal battle with regulators as they scrutinise his social media posts and Tesla’s treatment of workers, including accusations of discrimination.
Last week, the Tesla CEO accused the SEC of harassing him and Tesla with an ‘endless’ and ‘unrelenting’ investigation to punish him for being an outspoken critic of the government.
Earlier this month, Tesla disclosed that it had received an SEC subpoena on Nov. 16 seeking information about its governance processes and compliance with a settlement it reached with the agency in September 2018 over Elon Musk’s tweeting.
As part of that agreement, Tesla pledged to put in place controls to oversee the CEO’s communications — including his tweets — after the SEC alleged the world’s richest person had committed securities fraud by saying on the social media platform that he had secured funding for the company to go private.
Musk and the SEC have been at loggerheads ever since. The agency sought to have a judge find the billionaire in contempt of the settlement early the following year when he tweeted about Tesla’s production outlook without getting prior approval. The two sides agreed in April 2019 to amend their agreement by adding specific topics the Tesla chief can’t tweet about, or otherwise communicate in writing, without running it by a company lawyer.
SEC probes Elon Musk, brother Kimbal over Tesla share sales
