At issue are SolarCity's "Solar Bonds," which are senior, unsecured bonds that pay 6.5 percent interest and mature in early 2018. They are open to retail investors.
Officers or directors generally don't buy debt sold by the companies they run, and Elson generally advises against it. Elson's main concerns are that owning bonds puts officers and directors at "cross-fiduciary purposes" with shareholders, and does not signal the same confidence in the business as a stock purchase would.
"When you see an officer buying stock, it is a good sign — it means the business might have a good future," he said. "If you see them buying debt, you wonder, what is the long-term value."
And debtholders have different risk profiles than equity holders, Elson said. If a company goes bankrupt, for example, bondholders — even those holding unsecured notes — are usually paid before shareholders.
In brief, the difference is that a "debtholder's view is that they want to be repaid," Elson said. "An equity holder wants to create long-term value."
In a statement sent to CNBC, Lyndon Rive said, "We invested in SolarCity's Solar Bonds because it's a very efficient way for the company to raise capital without paying expensive banking fees. The bonds are issued directly, online, and there are no fees for investors either. That allows SolarCity to offer the bonds at a competitive rate for investors — 6.5 percent for 18-month bonds — and still come in lower than the cost of institutional non-asset financing."
Rive added, "Ultimately Elon, Pete, and I expect to be minority investors."
It appears to be the first time Musk has personally bought the Solar Bonds, though Reuters noted that Musk's company SpaceX has bought them before. Lyndon and Peter Rive, who are the company's chief executive and chief technology officer, respectively, are each buying $17.5 million of the $124 million offer.
Elson added, "I guess the question is: why?"
— CNBC's Michelle Fox contributed to this report.