US Securities and Exchange Commission investigates Elon Musk and brother over insider trading - report

Elon Musk hugging his brother Kimbal.
Elon Musk (r) and brother Kimbal (l) are under investigation for insider trading - report Photo credit: Getty Images

The US Securities and Exchange Commission (SEC) is investigating whether Tesla CEO Elon Musk and his brother Kimbal broke insider trading rules over recent stock sales, according to a new report.

The Wall Street Journal, citing people familiar with the matter, said Kimbal sold shares worth around US$108 million (NZ$161 million) a day before his brother asked his Twitter followers whether he should sell 10 percent of his Tesla stake.

Musk's question forced the share price down, with Tesla's shares now around a third lower than they were before the billionaire started selling his stake.

Those share sales in November, according to Reuters, were automatically executed according to a plan created by Musk on September 14, nearly two months before the Twitter poll.

The electric vehicle company confirmed earlier this month it had received a subpoena from the SEC over the tweet, which was issued on November 16 - around 10 days after the controversial billionaire asked his 73 million followers about the shares.

The latest information comes as the battle of words between Musk, his company and the SEC ramps up.

There's a long history between the parties, going back to 2018 when the commission sued over Musk tweeting he had secured funding to take the company private at $420 per share when it wasn't true.

It resulted in both Musk and Tesla paying US$20 million in fines and Musk's public musings about the company having to be cleared by a lawyer.

Last week a company lawyer wrote to the SEC saying it had been harassing them with an endless, unrelenting investigation to try and punish Musk for being critical of the US government.

"Enough is enough," lawyer Alex Spiro wrote.

The SEC hit back this week saying accusations from Tesla were "simply not true".

"If Tesla and Mr Musk have legitimate objections with the SEC's processes outside this litigation, they should pursue those objections in the appropriate forum," lawyer Steven Buchholz wrote.

The SEC also denied it had ignored commitments to distribute the US$40 million it took from Musk and Tesla following the 2018 battle.

"Given the complexity of the distribution, it has taken time to develop the plan of allocation," Buchholz wrote.

"That process is nearing completion and, barring any unforeseen circumstances, the Distributions staff expects to submit the proposed plan of distribution for the Court's approval by the end of March 2022."