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Elon Musk sells another $700m of Tesla shares, prompting legal scrutiny after Twitter stock poll

Elon Musk, the founder and chief executive of Tesla, has sold a further $700m (£523m) of shares in his company, just days after abiding by a Twitter poll and dumping a $5bn stake.

The second round of hefty stock sales comes after the world’s richest person and Tesla’s top shareholder tweeted that he would sell 10 per cent of his shares if users of the social media platform approved the move.

Musk disclosed the additional sale of 639,737 shares in the firm, was worth about $687m, in filings with the US Securities and Exchange Commission (SEC) on Friday.

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The sale came shortly on the heels of Musk offloading 3.6 million shares worth about $4bn earlier this week, after asking his 63 million Twitter followers over the weekend whether he should do so.

The poll, which attracted 3.5 million votes, saw 58 per cent vote in favour of the sale.

Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.

Do you support this?

— Elon Musk (@elonmusk) November 6, 2021
Neither the SEC nor Tesla were available for comment on the latest share sale.

As with the previous sale, the chief executive’s second sell-off spooked investors. Tesla shares were down 1.5 per cent in early trading and were headed for their first weekly decline in 12 weeks.

So far this week, Tesla has lost $157bn in stock market value, more than the combined market values of its traditional rivals Ford Motor and General Motors. But the electric vehicle maker is still the most valuable US auto firm by some distance.

“Tesla investors are exhausted after the roller coaster ride they’ve been on. I don’t expect a big impact on the share price after what we’ve already been through,” said Fiona Cincotta, senior markets analyst at City Index in London.

It has again raised questions as to whether the billionaire breached any rules or the settlement he agreed with the SEC for tweeting in 2018 that he had secured funding to take Tesla private when in fact he had not.

That agreement, which the SEC refined in 2019, requires Musk to check any Tweets material to Tesla investors with a company lawyer. Given Musk’s Tweet appeared to harm the company’s share price, he may have been in breach of the settlement had he failed to vet it.

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“This case seems like yet another instance where regulators and private plaintiffs are going to spend years investigating what he knew, what he did, and why,” said Ty Gellasch, head of investor group Healthy Markets.

Howard Fischer, a partner at law firm Moses & Singer, said if Musk had concealed the real reason for his sales that could arguably be a disclosure violation, but there was also a lot of public information on his reasoning for the sales.

“If Tesla was a normal company, and Musk a normal executive, this kind of behaviour would lead to a board rebuke or worse,” said Fischer. But investors appear by now to accept his “oddities,” he added.                     Source Link

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