A Tesla shareholder has taken legal action against CEO Elon Musk, accusing him of insider trading related to the sale of over $7.5 billion in Tesla shares during late 2022. The lawsuit, filed in Delaware Chancery Court, alleges that Musk sold his shares prior to the public release of potentially disappointing production and delivery numbers.
Michael Perry, the shareholder behind the lawsuit, claims that after Tesla's fourth-quarter results were disclosed on January 2, 2023, the company's stock price dropped significantly. Perry asserts that Musk \"improperly benefited\" by approximately $3 billion through these insider trades.
\"Musk exploited his position at Tesla, and he breached his fiduciary duties to Tesla,\" the lawsuit states, seeking the return of profits gained from these trades. According to the complaint, Musk executed the share sales in November and December of 2022.
The lawsuit also points fingers at Tesla's board of directors, alleging that they failed in their fiduciary duties by allowing Musk to conduct these sales.
As of now, both Musk and Tesla have not responded to requests for comment. Perry's lawsuit highlights that Musk was aware of the lower-than-expected performance numbers by mid-November, likely due to his access to real-time data. This knowledge prompted the significant sale of shares before the information became public.
Following the announcement of vehicle price discounts and the subsequent release of the financial numbers, Tesla's stock experienced a sharp decline.
\"Had Musk waited to make these sales until after the release of material adverse news,… his sales would have netted him less than 55% of the amounts realized from his November and December 2022 sales,\" the lawsuit claims.
This legal challenge adds to Musk's growing list of legal issues, including opposition from Tesla shareholders regarding his $56 billion pay package and ongoing regulatory investigations into his stock transactions.
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Tesla shareholder sues Musk for alleged $7.5 billion insider trading
cgtn.com
