Elon Musk and brother under investigation for Tesla share sales

US Securities and Exchange Commission probing whether recent sales 'violated insider trading rules'

A US federal district judge on Thursday rejected Tesla CEO Elon Musk’s attempt to bring the SEC before the court. AP

The US Securities and Exchange Commission is investigating whether recent stock sales by Tesla chief executive Elon Musk and his brother Kimbal Musk "violated insider trading rules", The Wall Street Journal reported on Thursday, citing people familiar with the matter.

The report says the investigation began last year after Kimbal sold shares of the electric car maker, valued at $108 million, one day before his brother polled Twitter users asking whether he should offload 10 per cent of his stake in Tesla.

The SEC issued a subpoena on November 16, 10 days after the poll, seeking information related to some financial data.

The potential investigation would escalate Mr Musk's battle with regulators as they scrutinise his social media posts and Tesla's treatment of workers, including accusations of discrimination.

Last week, Tesla and Mr Musk accused the SEC of harassing them with an "endless" and "unrelenting" investigation to punish the CEO for being an outspoken critic of the government.

Elon Musk's share sales in November were automatically carried out according to a trading plan he had created on September 14, a filing disclosing share sales showed, including stock options that were supposed to expire in 2022.

The SEC sued Mr Musk in August 2018 after he tweeted he had "funding secured" to potentially take his electric car company private at $420 per share. In reality, a buyout was not close.

Tesla's shares were up about 1 per cent in late-afternoon trading, paring losses amid a broader stock market rout.

The stock has fallen about 33 per cent since Mr Musk began selling billions of dollars worth of shares on November 8, few days after the poll where 58 per cent of voters asked him to sell.