Investor's Corner

Tesla’s Elon and Kimbal Musk main subjects of SEC probe for insider trading

Credit: @syncwraps/Instagram

A Tesla stock sale by Kimbal Musk has prompted an investigation by the Securities and Exchange Commission (SEC) for insider trading, according to a new report from the Wall Street Journal. The investigation aims to find out if Kimbal had advanced knowledge of a Twitter poll that his brother and Tesla CEO Elon Musk published, which asked followers if he should sell 10 percent of his shares for capital gains.

The investigation seems to interest Kimbal’s November 5 stock sale of 88,500 shares, according to a 13-F filing with the SEC. The next day, CEO and brother Elon Musk polled his over 40 million Twitter followers, proposing a sale of 10 percent of his Tesla holdings. The poll accrued over 3.5 million votes, with 57.9 percent of respondents supporting Musk selling the stock.

Musk kept his word and offloaded 10 percent of his holdings before 2021 ended. Musk still owns a 21.2 percent stake in Tesla, according to other documents filed by the automaker.

If it can be proven that Kimbal knew about the Twitter poll in advance and chose to sell his shares because of it, he could be violating rules that prevent board members and prominent members of a company from trading on information that is not public knowledge, the report stated.

Elon Musk says he’ll sell 10% of his Tesla stock under one condition: If Twitter says so

Elon Musk has had a long, tumultuous relationship with the SEC. Since 2018, when Musk and the SEC settled with $40 million fines and a list of new requirements, which included Elon’s Twitter communications being approved before publishing, the two have seemed to have a distinct rivalry. Earlier this week, Musk revealed he has been building a case against the SEC for years. Musk’s attorney Alex Spiro penned a letter to the Southern District of New York last week that accused the agency of harassing the CEO and Tesla.

The letter also included accusations that the SEC is withholding the $40 million in fines the agency collected from Musk and Tesla, which were set to be paid out to shareholders as a part of the 2018 settlement. Tesla said the SEC is “weaponizing the consent decree by using it to try to muzzle and harass Mr. Musk and Tesla, while ignoring its court-ordered duty to remit $40 million that it continues to hold while Tesla’s shareholders continue to wait” in its letter.

Tesla shares were up 2.70 percent at 3:13 PM in New York.

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Tesla’s Elon and Kimbal Musk main subjects of SEC probe for insider trading
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