Musk Brothers Under SEC Insider Trading Investigation Over Tesla Stock Sale

One Day Before Brother Musk's Stock Sale Poll in November Last Year, Younger Brother Sold Shares

Elon Musk, CEO of Tesla (left), and his younger brother Kimbal Musk [Image source=Reuters Yonhap News/Kimbal Musk SNS]

[Asia Economy Reporter Jeong Hyunjin] It has been confirmed that Elon Musk, CEO of Tesla, and his younger brother Kimbal Musk are under investigation by the U.S. Securities and Exchange Commission (SEC) regarding their sudden sale of Tesla shares last year, the Wall Street Journal (WSJ) reported on the 24th (local time).

WSJ, citing anonymous sources, reported that the SEC is examining allegations of insider trading by the Musk brothers. One day before Elon Musk posted a Twitter poll asking whether to sell 10% of his Tesla shares in November last year, the brothers sold Tesla stock worth $108 million (approximately 130.1 billion KRW), after which the SEC began its investigation.

At that time, Musk's Twitter poll received 58% approval, and Elon Musk proceeded to sell a large amount of Tesla shares in December last year. As a result, the tweet was perceived as negative news for Tesla, causing the stock price to drop by more than 30%. One day before the tweet was posted, Kimbal Musk sold 88,500 Tesla shares he owned and donated 25,000 shares to charity.

The SEC appears to be investigating whether Kimbal Musk, a Tesla director, used non-public insider information to decide the timing of his share sales. WSJ analyzed, "The SEC may have asked whether Elon Musk informed his brother in advance about posting the tweet, discussed the timing of his brother’s stock sales, or whether Kimbal Musk became aware of this through insider information."

In particular, to prevent insider trading, the U.S. applies Rule 10b5-1, which requires corporate insiders to trade shares according to a pre-submitted plan to limit trading based on insider information. Kimbal Musk has conducted about 40 stock transactions under Rule 10b5-1 since 2011, but WSJ reported that there was no record of using this program for the transactions in question.

Although the SEC has been investigating since last year, if no significant evidence is found, the investigation may simply be closed as an internal inquiry.

This content was produced with the assistance of AI translation services.