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I have a lot of respect for those who do government regulatory work. It’s necessary, and there are not a lot of parades or medal ceremonies in it for them.

But, like the rest of us, regulators are human beings. They can go too far. They also have the unique workplace dynamic of being able to conjure new tasks if the workflow in the pipeline dries up.

It really seems like that’s what happening with the Securities and Exchange Commission’s latest investigation of Elon Musk. If you’re not already familiar with the situation, last September, Musk began discussing his plans to sell some of his Tesla stock (he had options set to expire in 2022). On November 6, Musk tweeted out a poll asking his Twitter followers, “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?” He promised to abide by the results of the poll, and 58 percent of respondents voted in favor of Musk selling Tesla stock.

Musk followed through and sold more than $4 billion worth of Tesla stock on November 10, and he continued with stock sales until December 28, at which point he had cashed out on $16 billion worth of Tesla stock over about two months. Naturally, Tesla’s stock price declined a bit with such a high volume of shares hitting the market.

The apparent problem now though for the SEC is that Elon Musk’s brother, Kimbal Musk, sold 88,500 of his own Tesla shares on November 5 — the day before Elon Musk launched his Twitter poll. Kimbal Musk is a Tesla board member who has regularly sold shares throughout his tenure. The 88,500 shares he sold in November represented about 15 percent of his Tesla holdings at the time. When Kimbal Musk sold these shares, he received almost $109 million. With the benefit of hindsight, we now know that had Kimbal Musk waited until after Elon Musk’s own stock sales, Kimbal would have netted about $5.8 million less than he got by selling on November 5.

Thus, the SEC has opened an insider trading investigation into Elon and Kimbal Musk.

This is a dumb investigation and a waste of taxpayer money for a number of reasons. One, there is no evidence that Kimbal Musk knew anything in advance about his brother’s plan to launch a Twitter poll regarding possibly selling stock, and Elon Musk denied wrongdoing. That passes the sniff test. I certainly haven’t ever run even one of my social media posts past my brother beforehand, nor can I imagine nearly any set of brothers doing it. It seems to me like the brotherly dynamic runs pretty consistently across socioeconomic status.

Two, insider trading carries a sentence of up to 20 years in prison. Elon Musk and Kimbal Musk have a combined net worth of around $221 billion (most of that is Elon’s, but Kimbal has hundreds of millions of dollars of his own). So, the SEC is telling us that it’s worth taxpayer money to investigate whether two men who have a combined $221 billion risked 20 years in prison to realize $5.8 million more than they otherwise would have on a stock sale. Remember, one of these men is among the smartest people in the world who revolutionized the electric automobile industry and essentially created the private spaceflight industry. And, to be fair to Kimbal, he is no dummy either. I really don’t think these guys illegally colluded to increase their fortune by less than 3/100,000ths.

Lastly, experts on insider trading say that Elon Musk’s personal intentions for his own stock do not even qualify as the type of insider information that could support insider trading charges. The experts are making a lot of sense on this one, because generally insider trading requires trading of a company’s stocks by those with access to nonpublic or confidential information about the company. What your zany brother intends to do with his own stock might be interesting information, but it’s certainly not information about Tesla as a company.

As a Tesla shareholder myself, what I’d really love for the SEC to do to protect me is to stop harassing Elon Musk for half a decade with pointless investigations so that instead of answering discovery he can focus his considerable talents on building more electric cars. That would be fantastic.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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