A Tesla shareholder has sued CEO Elon Musk, accusing him of insider trading related to the sale of over $7.5 billion in shares of the electric vehicle maker’s stock in late 2022.
“Musk exploited his position at Tesla, and he breached his fiduciary duties to Tesla,” a lawsuit from shareholder Michael Perry, which was filed in the Delaware Chancery Court last week, said. Perry also claims Musk “improperly benefited” by roughly $3 billion in profits based off of insider knowledge.
Musk sold Tesla shares in late 2022 after stating demand for the company’s EVs was “excellent.” However, Perry alleges in his lawsuit that Musk saw delivery numbers for the quarter and noticed they were lower than previously anticipated.
Perry claims this is why Musk sold the stock, and the statement that demand was high was a way of giving investors false hope regarding Tesla’s quarterly deliveries. Investors could have potentially bought shares, driving the stock price upward, while Musk sold shares, according to Perry’s lawsuit.
He believes Musk “waited to make these sales after the release of adverse news” and that “his sales would have netted him less than 55 percent of the amounts realized from his November and December sales.”
The suit comes just as Tesla is set to hold a crucial Shareholder Meeting that could have major implications considering what is at stake. Musk and Tesla are hoping shareholders will vote to ratify an already-approved pay package that the CEO had revoked from him earlier this year.
Tesla is pulling out all the stops to get Elon Musk’s $56B pay package approved
The package was revoked in a Delaware Chancery Court, the same court where this suit was filed.
Tesla is also having shareholders vote on whether the company should remain incorporated in Delaware. Many believe the automaker should move to Texas.
Musk is also not having his first go around with posts on X and potential stock violations. In 2018, he said that Tesla had “funding secured” to go private at $420 per share. However, the SEC saw this as a violation and required him to step down as Tesla’s chairman and have his posts on X, then known as Twitter, monitored and approved.
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