Landing in yet another controversy, Tesla CEO Elon Musk has been named in a shareholder lawsuit for allegedly being involved in $7.5 billion insider trades at the electric car company.
The lawsuit by a Tesla investor claims that Musk had inside knowledge of a miss on production and delivery numbers that Tesla Inc. was facing when he sold more than $7.5 billion in stock in 2022.
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Tesla investor Michael Perry alleged in his lawsuit that Elon Musk had nonpublic information that Tesla would miss its fourth quarter targets in 2022 and sold his shares. The suit was filed on Thursday in Delaware Chancery Court.
Perry said in his complaint that Musk “exploited his position at Tesla, and he breached his fiduciary duties” to the company and its shareholders. The Tesla CEO sold those company shares to complete his buyout of social media platform X, formerly Twitter.
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The lawsuit alleges, that “Musk profited from his misconduct and his exploitation of material and adverse inside information.” The investor further asked the judge to order Musk to return the profit from his alleged improper trading back to the company.
In his lawsuit, Perry also accused the Tesla directors of failing to make sure that Musk complied with the legal obligations in stock sales and statements about Tesla’s financial performance.
Musk touted the quarterly performance earlier in 2022, saying the company enjoyed “excellent demand” and expected “to sell every car we make as far into the future as we can see,” according to the suit.
However, the Tesla CEO learned in November 2022 that the company won’t meet its targets for the fourth quarter. Before the development was officially announced, Musk dumped shares worth $7.53 billion.
It’s the latest dispute over Musk and his stock purchases, sales and remarks. The suit comes in the same week the 52-year-old billionaire agreed to sit for a third round of questioning by the US Securities and Exchange Commission in its probe of his Twitter acquisition and whether he properly disclosed his initial stake in the company.
(With inputs from Bloomberg)
