Following Musk’s poll, Tesla’s share price dropped by a seven percent margin in pre-market trading. The vote came when Musk was facing some intense criticism over allegations of tax evasion. Musk later claimed that he doesn’t take a fixed salary as Tesla CEO and that the only way for him to pay taxes is by unloading Tesla stock. Back then, Musk reportedly owned over 20 percent of all Tesla stock, valued at over $250 billion at the time. Late in December, it was reported that Musk made good on his Twitter promise, selling about a million Tesla stocks while also accruing 1.6 million new stocks the same day.
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However, the whole saga didn’t sit well with the SEC, especially with the near-perfect timing of his brother’s stock-selling spree. The Wall Street Journal reports that the SEC is investigating whether Musk and his brother Kimbal Musk violated insider trading laws when the latter unloaded $108 million worth of his Tesla stock a day before Musk’s infamous tweet sent the company’s shares on a downward spiral. The SEC defines insider trading as the act of buying or selling assets based on information that is not public knowledge and has been obtained from an insider source within a company. The SEC wants to know if Musk told his brother about the tweet in advance. Musk’s brother is also a member of Tesla’s board of directors.
Musk Denies The Allegations
The investigation reportedly started last year and falls under the scope of financial wrongdoings. Musk has denied that his brother knew anything about his plans of conducting a Twitter poll. “The idea that I would care about whether my brother might sell shares for a few million dollars less when my Twitter poll caused my own share sale to be over a billion dollars less is utterly absurd,” Musk was quoted as saying in the Financial Times. Musk also claims that his lawyers were aware of the poll in advance.
To recall, Musk has been asked to follow a court-ordered policy that requires his tweets to be pre-approved by company lawyers. Musk and the SEC have been in a disagreement for a while, and it only appears to be getting worse. Earlier this month, Musk also accused the SEC of leaking confidential information about the agency’s ongoing investigation. “The SEC leaked confidential information to the WSJ, deliberately violating federal law,” Musk told CNBC. Musk also drew flak recently over alleged animal cruelty at his Neuralink endeavor that aims to create a human-machine brain interface chip.