Musk seems to be on the table again...
Source: Video number "Hexun Financial Insights"
Recently, according to the Wall Street Journal, the U.S. Securities and Exchange Commission (SEC) is investigating whether Tesla CEO Elon Musk and his brother Kimbal Musk recently sold shares in violation of insider trading rules.
On November 6, 2021, Musk asked 72 million followers on Twitter whether to sell 10% of Tesla stock. Just the day before, Kimbar had sold 88,500 shares of Tesla stock. The focus of the SEC investigation is whether Kimbar was informed in advance that Musk was going to launch a vote on Twitter to reduce his holdings with fans.
Elon Musk denied the SEC's allegations. Musk told the Financial Times: "Kimbal didn't know I was going to do a poll on Twitter. "When my Twitter polls led to my own stock selling more than $1 billion less, would I care if my brother would lose millions of dollars less when he sold his stock?" This idea is completely absurd. ”
However, Tesla stock was not much affected by this, and Tesla still rose 7.48% on Monday (February 28) local time.
Kimbar cashed out $100 million
According to the Wall Street Journal, the U.S. Securities and Exchange Commission (SEC) is investigating whether Tesla CEO Elon Musk and his brother Kimbal Musk violated insider trading rules.
The SEC's investigation reportedly began last year with a focus on Kimbal Musk's stock sell-off.
Musk launched a vote on Twitter on November 6 last year, asking his 72 million Twitter followers if they should sell 10% of Tesla stock. The poll results show that of the 3.5 million votes, nearly 58% support the sale. Musk then began a series of sell-offs. Since then, Tesla's stock price has fallen all the way, falling by more than 30% as of the close of trading on Feb. 24.
Based on his shareholdings at the time, Musk was expected to reduce his holdings by 17 million shares, and the cash amount would be close to $21 billion (about 130 billion yuan). In a media interview in late December 2021, Musk claimed to have sold enough Tesla stock to reduce his holdings by nearly 10 percent.
However, Kimball Musk sold 88,500 shares of Tesla stock (worth about $108 million) the day before his brother launched the vote. Kimbal Musk is a Tesla board member, and typically, employees and directors of public companies cannot buy or sell stocks when they know important information that has not been disclosed.
Regulators suspect that Long before Kimbar Musk dumped Tesla stock, he had been informed in advance of Elon Musk's plans to launch a vote on Twitter.
Public company executives generally avoid insider trading allegations through a program called the "10b5-1 Trading Plan," which allows insiders to buy and sell shares when they have access to certain information that has not yet been publicly disclosed, provided they do not change their plans when they have important non-public information.
Regulatory documents show that Kimbal Musk regularly trades Tesla stock under a 10b5-1 trading plan, more than 40 times since 2011. However, according to filings with the SEC on November 5, 2021, Kimbal Musk did not state that he used a 10b5-1 trading plan when selling 88,500 shares of Tesla stock. In addition to selling 88,500 shares, he donated 25,000 shares to charity, the documents show.
Musk responded
In response to the SEC's allegations, elon Musk denied passing on information to his brother Kimbal that could hurt Tesla's stock price, according to the Financial Times. In response to an inquiry from the Financial Times, Musk said in an email: "Kimball didn't know I was going to do a poll on Twitter. ”
Elon Musk said: "When my Twitter polls led to my own stock selling more than $1 billion less, would I care if my brother would lose millions of dollars when he sold his stock? This idea is completely absurd. ”
It is worth mentioning that after Elon Musk released that tweet on November 6, 2021, Tesla's stock price fell by 5% in the following trading day.
It should be noted that although Musk launched a public opinion poll on Twitter last year, there was a lot of noise. But in reality, Musk sold Tesla stock so hugely to pay taxes.
As part of his compensation plan, Musk received 22.8 million Tesla stock options in 2012 at an strike price of $6.24 per share. It is reported that these options will expire in August 2022. In order to exercise his rights, Musk must pay a high income tax of up to $15 billion for this part of the earnings. Bloomberg reported that if the payment is completed, this amount will set a record for an individual to pay taxes to the IRS.
On February 24, after the release of the news that musk brothers were caught in "insider trading", Tesla's stock fell by 8% at the opening of the day, but after the opening, it went all the way higher, and the closing stock price of $800.77 / share on the 24th. At present, Elon Musk personally holds 173 million shares of Tesla stock, with a shareholding ratio of 16.70%, which means that his personal holding of Tesla has a market value of up to $138.5 billion.
Musk and the SEC continue to "fight"
It is worth mentioning that Elon Musk has always had a bad relationship with the U.S. Securities and Exchange Commission (SEC), and he has publicly attacked the SEC on many occasions, including calling the SEC a "Shortseller Enrichment Commission" on Twitter.
On Thursday, February 24, local time in the United States, the U.S. District Judge on Thursday rejected Elon Musk's request to take the U.S. Securities and Exchange Commission (SEC) to court.
Previously, Musk accused the SEC of harassing him through endless investigations to deprive him of his right to free speech, but ignored the duty to distribute the $40 million fines to Tesla and Musk to shareholders. Moreover, Musk also accused the SEC of leaking information about a federal investigation, saying that this was retaliation for his previous public criticism of the SEC.
In an order issued Thursday, Judge Alison Nathan noted that the SEC never set a deadline for paying shareholders $40 million. But she said Musk could file a motion to set a deadline. "Otherwise, the Supreme Court cannot enforce deadlines that do not currently exist." Nathan said.
In response to Musk's allegations that the SEC leaked investigative information, the judge said his lawyer's letter to the court did not contain "specific facts or statutory authority" to prove that they had requested recorded assurances that the SEC would not divulge the details of the investigation.
Musk's lawyers reportedly did not specify what investigations or types of information the SEC may have leaked, and to whom. He alleges that at least one SEC member leaked "certain information about his investigation" but did not provide any evidence.
The conflict between Musk and the SEC began in September 2018, when the SEC accused Musk of making "false and misleading" statements to investors. In August 2018, Musk tweeted that he had received enough money to take Tesla private at $420 per share. Tesla's stock price has therefore fluctuated throughout the month, and the deal Musk mentioned has never been closed.
As part of Musk's settlement with the SEC, Musk and Tesla each need to pay $20 million in fines, and Musk was forced to resign as chairman and not be elected for at least three years. Tesla must also set up a system to oversee musk's company-related statements on Twitter, blogs or other media outlets.
On Feb. 18, SEC's Steven Buchholz responded that the agency had made progress on returning a $40 million fine to Tesla shareholders. He sees the task as complicated, noting that Tesla and Musk have never expressed concern about remittances before. He also said SEC staff expect to submit a "proposed fine return plan" to the court by the end of March.
Coupled with the news that the SEC has investigated the insider trading of musk brothers, the "enmity" between Musk and the SEC has been deepening.
Original title: Heavy! Musk has a big deal, and the SEC suddenly investigates! His brother "pinched the point" to reduce his holdings, cashed out $100 million, and was caught in the whirlpool of insider trading...
Source of the article: Brokerage China
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