A federal insider trading probe has recently been launched against Tesla Motors and Cardiovascular Systems Inc., a medical device company.
Subpoenas were sent to executives at both companies by the U.S. attorney’s office for the Eastern District of New York requesting emails and documents related to a trading plan, according to the Wall Street Journal.
The Journal reported this is an extension of an existing criminal probe into trading by company insiders led by the U.S. attorney for the Southern District of New York and the Securities and Exchange Commission.
In question by investigators are potential violations to “10b5-1 plans” which are present trading arrangements made allowable in 2000 by the SEC.
Under the plans, executives and non-executive directors who have knowledge of non-public corporate information are permitted to sell some shares, but the plans must be established prior to the executive having insider knowledge.
The prosecutors – which have not alleged any wrongdoing at this juncture – are looking into whether violations to the rules existed, such as insiders shedding their positions when they had privileged information.
A spokesperson for Cardiovascular Systems told the Journal it was complying with investigators in full.
“We have nothing to hide,” he said, adding that an investment fund held by its director that sold shares was “in compliance with the company’s governance procedures.”
A Tesla spokesperson declined to comment, as did representatives for the SEC and New York’s Eastern and Southern districts.
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