A Tesla shareholder filed a lawsuit Thursday accusing CEO Elon Musk of insider trading when he sold more than $7.5 billion of the electric car maker’s stock at the end of 2022, saying the billionaire entrepreneur sold the stock ahead of potentially disappointing production data. and deliveries announced.
Shareholder Michael Perry, in a lawsuit filed in Delaware Chancery Court, said Tesla’s stock price fell after the company’s fourth-quarter results were released on Jan. 2, 2023, and alleged that Musk “inappropriately benefited” from about $3 billion in insider profits .
“Musk took advantage of his position at Tesla and breached his fiduciary duties to Tesla,” the lawsuit says, asking the court to order Musk to return the profits from the trade.
According to the lawsuit, Musk sold the stock on different dates in November 2022 and December 2022.
The suit also accused Tesla’s directors of breaching their fiduciary duty by allowing Musk to sell the stock.
Musk and Tesla did not immediately respond to Reuters’ request for comment.
In the lawsuit, Perry said that Musk – who said in 2022 that demand for Tesla vehicles was “excellent” – learned of the lower-than-expected numbers in mid-November, with access to real-time data, and sold his stock before the information was public.
After news of vehicle price cuts that fueled demand concerns and the release of January numbers, Tesla shares fell.
“If (Musk) had waited to sell until significant negative news was announced, … his sale would have netted him less than 55% of the amounts realized from sales in November and December 2022,” the lawsuit states.
The lawsuit is the latest legal headache for Musk.
It comes as Musk faces opposition from some Tesla shareholders who are scheduled to vote June 13 on whether to ratify his $56 billion pay package, which a Delaware judge overturned in January after she found he improperly controlled the process.
Tesla was founded in Delaware.
Musk is also in the middle of a regulatory investigation into whether he violated federal securities laws in 2022 when he bought shares in social media platform Twitter, which he later renamed X. Musk said the US Securities and Exchange Commission was trying to “harass” him through unjustified investigations.
Musk and the top U.S. markets regulator have been at loggerheads for years, dating back to 2018, when he tweeted that he had “secured funds” to take Tesla private.
A separate shareholder lawsuit accused Musk of defrauding X investors by delaying the announcement of his stake in the social media company in order to scoop up shares at lower prices.
© Thomson Reuters 2024
