US regulator probes Elon Musk, brother Kimbal over Tesla share sales

BENGALURU (REUTERS) - The United States Securities and Exchange Commission (SEC) is investigating whether recent stock sales by Tesla chief executive Elon Musk and his brother Kimbal Musk "violated insider trading rules", the Wall Street Journal reported on Thursday (Feb 24), citing sources familiar with the matter.

According to the report, the investigation began last year after Mr Kimbal Musk sold shares of the electric car maker valued at US$108 million (S$146 million), a day before Mr Elon Musk polled Twitter users asking whether he should offload 10 per cent of his stake in Tesla.

Mr Kimbal Musk did not know about the Twitter poll ahead of it, Mr Elon Musk told the Financial Times in an e-mail, adding that his lawyers were "aware" of the poll.

An earlier settlement with the SEC required his public statements about the company's finances and other topics to be vetted by its legal counsel.

The SEC issued a subpoena on Nov 16, 10 days after Mr Elon Musk's poll, seeking information related to some financial data.

The potential probe would escalate Mr Elon Musk's battle with regulators as they scrutinise his social media posts and Tesla's treatment of workers, including accusations of discrimination.

Last week, Mr Elon Musk 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.

Mr Elon Musk's share sales in November were automatically executed according to a trading plan he had created on Sept 14, showed a filing disclosing share sales, including stock options that were supposed to expire this year.

Tesla's stock has fallen about 33 per cent since Mr Elon Musk began selling billions of dollars worth of shares on Nov 8, a few days after the poll, where 58 per cent of voters asked him to sell.

Tesla and Mr Kimbal Musk did not immediately respond to Reuters' requests for comment. A spokesman for the SEC declined to comment.