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SEC Probes Trading by Elon Musk and Brother in Wake of Tesla CEO’s Sales

Investigation looks partly at Kimbal Musk’s trades before brother’s pledge to sell based on Twitter poll
Elon Musk has maintained a combative posture with the SEC in recent years.. PHOTO: JAVIER ROJAS/ZUMA PRESS

Elon Musk has maintained a combative posture with the SEC in recent years.. PHOTO: JAVIER ROJAS/ZUMA PRESS

WASHINGTON—The Securities and Exchange Commission is investigating whether recent stock sales by Tesla Inc. TSLA 1.14% Chief Executive Elon Musk and his brother, Kimbal Musk, violated insider-trading rules, according to people familiar with the matter.

The SEC’s investigation began last year after Kimbal Musk sold shares of Tesla valued at $108 million, one day before the Tesla chief polled Twitter users asking whether he should unload 10% of his stake in the electric-car maker and pledging to abide by the vote’s results.

Elon Musk had framed the potential sale as a way to cover any taxes he would need to pay if lawmakers imposed new taxes on unrealized capital gains. He began selling billions of dollars worth of stock a few days after his tweet. 

Kimbal Musk sold 88,500 shares one day before the Tesla CEO tweeted about the potential sales of his own. The company’s shares fell sharply in the wake of Mr. Musk’s poll—58% of voters said he should sell—indicating the tweet was viewed as negative news. 

Spokesmen for the SEC and Tesla didn’t respond to a request to comment.

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Author: Editors Desk

Source: WSJ:

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