Dark
Light
Today: June 23, 2024
June 1, 2024

Tesla Shareholder Sues Elon Musk Over Alleged $7.5 Billion Insider Trading

A Tesla shareholder, Michael Perry, has filed a lawsuit against CEO Elon Musk, accusing him of insider trading involving the sale of over $7.5 billion worth of Tesla shares in late 2022. The lawsuit, filed on Thursday in the Delaware Chancery Court, claims that Musk sold these shares before Tesla’s potentially disappointing production and delivery numbers were publicly disclosed.

Perry alleges that Tesla’s share price plummeted after the company’s fourth-quarter results were released on January 2, 2023. The lawsuit asserts that Musk “improperly benefited” by approximately $3 billion in insider profits due to his early sales. According to the filing, Musk sold shares on various dates in November and December 2022.

The lawsuit further accuses Tesla’s directors of breaching their fiduciary duty by allowing Musk to sell the shares. Perry claims that Musk exploited his position at Tesla, breaching his fiduciary duties to the company. The lawsuit demands that Musk return the profits he made from these trades.

Perry argues that Musk, who had previously stated that demand for Tesla vehicles was “excellent,” became aware of the lower-than-expected production numbers in mid-November through his access to real-time data. He allegedly sold his shares before this adverse information was made public. Once news of vehicle price discounts, which sparked concerns about demand, and the actual production numbers were released in January, Tesla’s stock value dropped significantly.

The lawsuit highlights that if Musk had waited to sell his shares until after the release of the disappointing production numbers, he would have made less than 55% of the profits realized from his November and December 2022 sales.

This lawsuit adds to Musk’s growing legal challenges. He is currently facing opposition from some Tesla shareholders, who are scheduled to vote on June 13 on whether to ratify his $56 billion compensation package. This package was previously voided by a Delaware judge in January, who ruled that Musk improperly controlled the process.

Additionally, Musk is under a regulatory investigation to determine whether he violated federal securities laws in 2022 when he purchased stock in the social media platform Twitter, which he later renamed X. Musk has accused the U.S. Securities and Exchange Commission (SEC) of “harassing” him through unwarranted investigations.

Musk and the SEC have had a long-standing feud, dating back to 2018 when he tweeted that he had “funding secured” to take Tesla private. This tweet led to significant regulatory scrutiny and legal battles.

In a separate shareholder lawsuit, Musk is accused of defrauding X investors by delaying the disclosure of his stake in the social media company, allowing him to amass shares at lower prices.

As of now, neither Musk nor Tesla has responded to requests for comment on the latest lawsuit. The case underscores the ongoing legal and regulatory pressures facing Musk and his companies.

Read more Business related news on R9 News
Jhumpa Lahiri

Jhumpa Lahiri

At our news portal, we strive to be your go-to destination for staying informed about the latest developments, breaking news, and insightful analysis across a diverse range of topics. Whether you're interested in politics, technology, health, entertainment, or global affairs, we've got you covered with comprehensive coverage and in-depth reporting.

Previous Story

Medtronic Appoints Mandeep Singh Kumar as Vice President of India Business

Next Story

Central Government Issues Advisory Following Bird Flu Outbreaks in Four States

Latest from Blog

Go toTop

Don't Miss

Ola Electric Adopts Revolutionary 4680 Battery Cell Technology Pioneered by Tesla

Ola Electric is poised to revolutionize the electric vehicle (EV)

Tesla Shareholders Endorse Musk’s $56 Billion Pay Package Amidst Controversy

Tesla shareholders have given a resounding thumbs-up to CEO Elon