Tesla trades lower after some insiders adopt trading plans to sell shares

Tesla (NASDAQ:TSLA) traded lower on Tuesday after it was highlighted that Chair Robyn Denholm and directors Kathleen Wilson-Thompson and Kimbal Musk adopted so-called Rule 10b5-1 plans to sell a total of 1.13 million shares. The timing of any potential sales by the insiders is still uncertain.

The combined selling amount would be close to $300 million if all three trading plans are executed to completion.

SEC Rule 10b5-1 was set up as a regulation that provides an affirmative defense against insider trading allegations for corporate insiders and companies who trade their own securities. The rule allows insiders to set up pre-planned trading schedules when they don’t possess material non-public information, providing a way to trade company stock without risking insider trading accusations.

The largest individual shareholder of Tesla (TSLA) is CEO Elon Musk, followed by director Kimbal Musk, CFO Vaibhav Taneja, and Senior Vice President of Automotive Tom Zhu. Of course, institutional managers such as Vanguard Group, BlackRock, and State Street hold huge amounts of Tesla (TSLA) stock on behalf of clients.

Shares of Tesla (TSLA) were down 1.4% at 11:05 a.m.