Elon Musk dumped billions in Tesla stock while company kept investors in the dark: WSJ

Lost among all the attention paid to Elon Musk at the end of the year over his purchase and dismantling of the leadership of Twitter, was the implications over his sale of billions in Tesla stock which has some investment watchdogs questioning the timing.

According to a report from the Wall Street Journal's Jonathan Weil, the offloading of shares in the troubled carmaker was put in motion as the price of the stock dropped -- but also during a period when investors hadn't heard anything from the company about what the internal numbers were showing.

The report notes that the controversial Musk sold off almost $3.6 billion of the stock in December before Tesla released a Jan. 2 report that showed car deliveries were well below 4th quarter projections.

According to the Journal's Weill, "The timing of the stock sales raises a crucial question: Did Mr. Musk know that business had slowed when he sold his shares? Tesla hadn’t updated investors on its outlook in nearly two months."

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James Cox, a securities-law professor at Duke University, and an expert in insider trading, claimed the timing should raise red flags at the Securities and Exchange Commission.

In an interview, he stated, "This should be of great interest to the SEC,“ before adding, "The issue here is, what did he know and what was the market anticipating when he sold? That’s a critical moment.”

Noting that Musk and spokespeople for Tesla refused to comment, the Journal adds for perspective, "Mr. Musk sold nearly 22 million shares Dec. 12 -14 at an average price of about $163 a share, according to a regulatory filing. When the stock closed on Jan. 3 at just over $108, the shares Mr. Musk sold the prior month had declined in value by $1.2 billion. The stock has since rebounded to about $127. "

At issue is whether Musk took advantage of "a preset trading schedule, known as a 10b5-1 plan," that would state before the fact that a sale is forthcoming. However, as the Journal reports, "the disclosure form he filed with the SEC for the most recent stock sales didn’t say he was using a 10b5-1 plan for those trades. Under SEC rules at the time he didn’t have to disclose on the form whether he was using such a plan."

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According to securities-law professor Donald Langevoort of Georgetown University at Georgetown University, what transpired could be innocent or not -- but deserves investigation.

“Is it suspicious? Yes. Is it entirely possible there are other explanations? Of course. But that’s what the enforcement process is all about,” Langevoort suggested.

You can read more here.