Pursuing an insider-trading investigation into Elon Musk and Kimbal Musk may be challenging.

• Insider trading specialists suggest that Elon Musk's personal plans for his own stock may not be considered company information.
• Proving communication will be a larger obstacle for any insider-trading accusations or claims.

Coincidence or stock tip?

The SEC is investigating Kimbal Musk's sale of shares before Elon Musk made his own stock sale plans public. According to the Wall Street Journal, the investigation began after Kimbal sold $108 million of his stock a day before Elon polled Twitter users about selling 10% of his entire stake. The Twitter announcement and Elon's eventual share sale sent Tesla shares into decline, and they eventually fell more than 30% from their preannouncement levels.

Elon's brother, Kimbal, is a member of the Tesla board of directors and is subject to insider-trading rules that prohibit trading on material nonpublic information.

Attorneys for Kimbal Musk and Elon Musk declined to comment.

Insider trading attorneys claim that proving the case against the Musk brothers could be challenging.

Unlike a pending merger announcement or big product launch or recall, Elon Musk's plans to sell his stock could be considered his personal information rather than company material.

Insider-trading judgments are now more about using employer information unfairly rather than manipulating the market, according to Howard A. Fischer, a partner at Moses & Singer in New York.

Tesla's lawyers were aware of Musk's pending Twitter poll, but Kimbal was unaware of it.

Proving communication will be a significant challenge for any insider-trading accusations against Kimbal Musk if he overheard Elon Musk discussing a stock sale or inferred it from another conversation.

The SEC may attempt to obtain all communications between Kimbal and Elon Musk prior to the sale, which could include emails, texts, chat app messages, and records of board meetings.

Fischer explained that proving insider-information could be difficult if they only discussed a stock sale orally, without witnesses.

Perhaps it was a coincidence that Elon Musk sold his shares right before a market-moving event. Alternatively, they could have been at a family barbecue, if the Musks had such gatherings, and Kimbal speculated that Elon was planning to take action without discussing it specifically.

The 2021 timeline for Kimbal's sale and Elon's Twitter poll and sales is as follows:

• Elon Musk privately files a 10b51 plan to sell Tesla stock on Sept. 14.
• Elon reveals at the Code Conference that he will sell shares to pay taxes by the end of the year due to options expiring in Aug. 2022. "I have a large amount of options that are expiring early next year, so we will sell a significant block of options in Q4 to cover taxes."
• On Nov. 5, Kimbal Musk disposed of 88,500 Tesla shares, which accounted for approximately 15% of his total holdings. The average price per share was $1,229, resulting in a total proceeds of $108.8 million.
• Elon Musk proposes selling 10% of his Tesla stock after a poll he conducted among his followers reveals that 58% of them support the move. As a result, Tesla's share price begins to decline.
• Elon Musk disclosed that he sold over $4 billion in Tesla stock as part of a scheduled-selling program, marking the beginning of nearly two months of stock sales.
• Dec. 28: Elon Musk completes his stock sales totaling $16 billion.

The price of Tesla shares is approximately $812 per share, which is around 34% lower than the price at which Kimbal Musk sold his shares.