Brothers work together to earn dollars, what is Musk doing?

In the last three trading days, Tesla stock has rebounded by 14 percentage points, but the Musk brothers seem to be more eye-catching than the ups and downs of the stock price.

01

The Musk brothers' business

According to the Wall Street Journal, Elon Musk and his brother Kimbal Musk were investigated by the U.S. Securities and Exchange Commission (SEC) for alleged insider trading rules for selling shares.

Insider trading in the United States prohibits employees and board members from trading based on undisclosed information, but in November last year, Elon Musk threw out "whether to sell 10% of tesla stock held by him is decided by fans" The day before the poll, Kimbar sold 88,500 shares of Tesla stock worth more than $100 million.

According to reports, the focus of the SEC investigation is precisely whether Kimbar was informed in advance that Musk was going to launch this poll that will affect the company's stock price volatility.

It should be known that when the vote has not yet been closed and the selling is not detailed, Tesla's stock price has begun to collapse, and on November 8 and November 9, 2021, Tesla's stock price has plummeted by 16.25%. And on November 5, 2021, the day before Elon Musk launched the vote, Tesla's stock hit an all-time high of $1243.49.

In the past, Kimbar generally bought and sold stocks through a program called the "10b5-1" trading plan, and regulatory documents show that Kimbar has traded Tesla stock more than 40 times since 2011 under the "10b5-1" trading plan. The trading scheme allows company insiders to buy and sell shares when they have access to certain information that has not been publicly disclosed, which can be avoided for insider trading allegations.

This trading style is very popular among executives of U.S. public companies, but, according to documents filed with the SEC on November 5, 2021, Kimbar did not state that he used a "10b5-1" trading plan to cash out the $100 million Tesla stock.

Unsurprisingly, Elon Musk, in response to an interview with the Financial Times, said Kimball did not know that he would launch this poll on Twitter with huge impact on the stock price.

And, Elon Musk also stressed in his response that before the poll, Tesla lawyers knew he would release the tweet.

According to the settlement agreement reached between Elon Musk and the U.S. Securities and Exchange Commission in 2018, the tweets released by Elon Musk containing important news need to be reviewed by Tesla lawyers, and the poll released by Elon Musk in 2021 clearly contains important news, but whether such deviant tweets really passed the review of Tesla lawyers has attracted countless speculations.

The coincidences of this sell-off, coupled with the blood relationship between Elon Musk and Kimbal, many things are known to everyone, whether investors or regulators. The loopholes in Kimbal's "operation" naturally leave room for the SEC to play.

While Elon Musk argued that "given that the vote I initiated on Twitter cost me more than $1 billion when selling stock, the idea that I care about my brother might make millions less when selling stock is completely ridiculous." ”

But this is obviously illogical, there is no causal relationship between individual trading losses and insider trading, in other words, Elon Musk is just confusing the public, and the allegation of insider trading is difficult to get through.

02

How leeks protect themselves

Looking at the capital markets of various countries, the problem of insider trading is actually very common.

In the United States, the world's leading financial system, insider trading is not only unique to Tesla, at the end of 2021, the Federal Reserve Chairman Defense Fever was caught in the scandal of illegal stock trading, according to media reports, Powell's financial information shows that he had 26 transactions last year, of which 19 were automatic reinvestment of dividends. Although the Fed spokesman argued that Powell's operations were essentially automated transactions and were not affected by individual decisions.

However, some people pointed out that Powell's operations often occur at critical moments when major events occur in American society, such as sensitive time points such as President Trump's exposure to the need for medical treatment, which is really difficult to convince the public with coincidence that all this is just "automatic trading".

In addition to Powell, several Fed executives were forced to resign because of insider trading. The much-anticipated Fed dared to do so, not to mention executives of public companies.

In the mainland, whether it is the Hong Kong stock market or the A-share market, insider trading is also all over it, I believe that many investors have seen the scene of funds rushing away before major events such as announcements, trading suspensions, etc. According to media statistics, about 80% of illegal cases in the securities market are related to insider trading, and about 80% of the illegal transaction amount is related to insider trading cases. It can be seen that cracking down on insider trading is an important means to protect the rights and interests of investors, but how easy is it?

Due to the numerous forms of insider trading, there is a problem of difficulty in obtaining evidence. In recent years, the mainland government has also worked hard to clarify the relationship between insider trading, reform shortcomings and innovation, and do a good job in supervision, from policy to law enforcement.

However, in the capital market, when the word is the first, there are always people's hearts higher than the sky, and insider trading has been repeatedly prohibited, which has become a concomitant chronic disease of the securities market.

For ordinary people, in addition to being strict with themselves and not participating in insider trading, they should also seek a way to protect themselves, exert subjective initiative in the securities market, and screen high-quality targets with real value, rather than blindly chasing behind the news. Investors who lose their ability to judge right and wrong are more likely to become the "car drivers" of insider traders, and they do not know that they are "lifting the car" for people, and eventually the bamboo basket is empty.

Of course, insider traders can not only cover the sky with one hand, retrograde reverse against the law of the market, according to the famous pendulum theory, the stock price is like a pendulum swinging back and forth, although it will fluctuate under the influence of investment sentiment, but the stock price finally has a value center.

As ordinary investors, we must not indulge in the direction and strength of the pendulum swing, and ignore the fundamentals of the company, only by finding this price center, we can make more correct investment judgments and get rid of the fate of leeks.