Shareholder Michael Perry’s filing alleges that Elon Musk sold over $7.5 billion worth of Tesla shares in late 2022, ahead of the public release of potentially disappointing production and delivery figures.
Elon Musk has been accused of $7.5 billion Lawsuit
According to Perry, Tesla’s stock plummeted after the fourth-quarter results were disclosed on January 2, 2023. He claims that 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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The lawsuit filed by shareholder Michael Perry alleges that “Musk exploited his position at Tesla, and he breached his fiduciary duties to Tesla,” according to Reuters. Perry is requesting that the court order Musk to return the profits he allegedly made from the trades, which are claimed to be around $3 billion.
The Lawsuit Claims
The lawsuit claims that Elon Musk sold the shares on various dates in November 2022 and December 2022. Perry also accused Tesla’s directors of breaching their fiduciary duty by allowing Musk to sell the shares. Musk and Tesla did not immediately respond to Fox Business’ request for comment.
The lawsuit alleges that Elon Musk, who in 2022 claimed that demand for Tesla vehicles was “excellent,” became aware of the underwhelming production and delivery numbers in mid-November through his access to real-time data. It further claims that Musk sold his shares before this information was made public.
Tesla Demands
When Tesla announced vehicle price discounts and released production and delivery data in January, analysts raised concerns about the demand for Tesla cars, leading to a drop in Tesla’s stock price.
The lawsuit states, “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 comes amid Elon Musk urging Tesla shareholders to vote to reinstate his $56 billion pay package, which a Delaware judge struck down in January.
The Judge Ruling
The judge ruled that Tesla’s board of directors did not adequately disclose their personal ties to Musk and noted that the company was on pace to meet most of the plan’s benchmarks. Due to the lack of these disclosures to shareholders, the compensation plan’s excessive size was deemed void by the judge.