According to a filing from shareholder Michael Perry, Elon Musk sold more than $7.5 billion in Tesla shares in late 2022 before the public release of probably disappointing production and delivery figures.
Elon Musk has been accused of $7.5 billion Lawsuit
According to Perry, Tesla’s stock plunged following the reveal of the fourth-quarter results on January 2, 2023. He claims Musk “improperly benefited” by approximately $3 billion through insider trading, leveraging non-public information to sell shares before the negative impact on the stock price became known.
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According to Reuters, the lawsuit from shareholder Michael Perry said, “Musk exploited his position at Tesla” and “he breached his fiduciary duties to Tesla.” He had also called on the court to force Musk to return the profit he had gained allegedly from the trades, claimed to be around $3 billion.
The Lawsuit Claims
The lawsuit accuses Elon Musk of selling the shares on several dates in November and December 2022. He also charged Tesla directors with breaching their fiduciary duty by allowing Musk to sell shares. Musk and Tesla did not immediately respond to Fox Business’ request for a reply.
The lawsuit alleged that Musk concealed the poor production and delivery figures while telling investors that demand for Tesla vehicles was “excellent” in 2022. It is further claimed that Musk got wind of underwhelming production and delivery numbers in mid-November due to real-time data access, offloading shares before public disclosure.
Tesla Demands
When Tesla announced vehicle price discounts and released production and delivery data in January, analysts expressed concern about the demand for Tesla cars. Its stock price fell.
The lawsuit said, “(Musk) had he 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 comes at a time when Elon Musk is urging Tesla shareholders to vote for the reinstatement of his $56 billion pay package, dismissed by a Delaware judge in January.
The Judge Ruling
The court agreed that Tesla’s board did not disclose the directors’ personal relationship with Musk and also agreed that the company was on track to hit most of the benchmarks laid down in the plan.
Since these relationships were not disclosed to the shareholders, it is considered that the excessive size of the compensation plan did not exist.
In response to the ruling, Elon Musk has been pushing for Tesla to move its state of incorporation from Delaware to Texas; an item currently placed for a shareholder vote at an annual meeting.
Separately, the SEC is investigating Musk over his 2022 acquisition of Twitter, which he has rebranded as X. Musk previously said the SEC was trying to “harass” him by conducting meritless investigations.
