According to The Wall Street Journal, the Securities and Exchange Commission is looking into whether recent stock sales by Musk and his brother may have violated insider trading rules.
The investigation began after Musk and his brother sold their shares in the company. On the day of the sale, Musk promised to abide by the results of the poll on whether he should sell a tenth of his stake in the company.
If Congress imposed new taxes on capital gains, Musk said stock sales would be a way to make up the difference. When the poll was over, 57.9% of people had voted yes, and 48.6% had voted no.
Kimbal Musk, who also sits on Tesla’s board of directors, sold 88,500 shares one day before his brother tweeted the poll
The Journal says that Kimbal Musk sold 88,500 shares one day before his brother took to the polls. Employees and board members can't trade based on information that isn't public.
The program known as 10b5-1 allows employees and board members to avoid insider trading charges by trading at preset times. According to the Journal, Kimbal Musk has used this program in the past, issuing 40 disclosures that he has traded shares under the 10b5-1 program. The disclosure regarding the shares he sold before his brother's poll did not indicate he was using that program.
Regulators are likely to look into whether Musk told his brother about the poll or potential sale before Kimbal Musk sold his shares, according to securities law experts.
The SEC declined to comment. Since the dissolution of its media relations division in February of last year, the company has not responded to reporters' questions.
In recent weeks, Musk has been at war with the SEC, accusing the agency of subjecting him and his company to unwarranted investigations. He claimed that the SEC was leaking information about federal investigations without providing any evidence.
Elon Musk has been at war with the SEC in recent weeks
The SEC launched an investigation after Musk sent a message about taking the company private.
The SEC and the company agreed that Musk should be subject to more oversight, with a company lawyer designated to pre-approve his statements about the company's financial health, sales, or delivery numbers.
The SEC asked a federal judge to hold Musk in contempt for violating the terms of his agreement by sending out a false and inaccurate message. The SEC said that Musk was in violation of the settlement because he claimed the agency was attempting an unconstitutional power grab. A federal judge ordered the two sides to work out their differences.
Musk said on Thursday that he was building a case against the SEC and would finish it.
I didn’t start the fight, but I will finish it.
— Elon Musk (@elonmusk) February 23, 2022