The SEC is investigating Elon Musk and his brother Kimbal over the sale of shares

The Securities and Exchange Commission is investigating whether Tesla Inc. CEO Elon Musk and his brother Kimbal violated securities laws when they sold the company’s shares late last year, according to a person familiar with the matter.

The regulator’s investigation focuses on deals that took place just before Elon Musk asked his Twitter followers about whether he should sell a 10% stake in the company. The SEC is looking into whether any insider trading rules have been violated, said a person familiar with the matter, who asked not to be named because the investigation is private.

The SEC declined to comment. Tesla, Elon and Kimbal Musk did not immediately respond to requests for comment. The investigation was previously reported by the Wall Street Journal.

Tesla shares plummeted after the CEO’s speech in November. 6 Twitter poll, highest close in five months. Kimbal Musk, a member of Tesla’s board of directors, sold 88,500 Tesla shares worth about $109 million on November 1st. 5, according to the application after the close of the market on the same day.

Tesla said this month that it had received a subpoena from the SEC. 16 looking for information about their management processes and compliance with the agreement reached with the agency in September 2018 in connection with Elon Musk’s tweet.

As part of that agreement, Tesla pledged to take control of the CEO’s communications, including his tweets, after the SEC said the world’s richest man committed a securities fraud by claiming on a social media site that he provided funding for the company to go private.

Since then, Musk and the SEC have been at odds. The agency sought to have the billionaire convicted of contempt of settlement by a judge the following year when he tweeted about Tesla’s production prospects without getting prior approval. In April 2019, both parties agreed to amend their agreement to add certain topics that a Tesla executive could not tweet or otherwise communicate in writing without the involvement of a company lawyer.

The dispute gained new momentum last week when a lawyer for Musk told a federal court that the SEC was conducting an “ongoing investigation” against Musk and the electric car maker because the CEO is “an outspoken critic of the government.” SEC denied assertion, and on Thursday The judge dismissed the claims.

Bloomberg contributors Ed Ludlow, Bob Van Voris, and Craig Trudell contributed to this report.