Tesla CEO Elon Musk is facing a shareholder lawsuit alleging insider trading involving $7.5 billion in shares. The lawsuit, filed by shareholder Michael Perry in Delaware Chancery Court, claims Musk sold shares before disclosing potentially disappointing production and delivery figures.
According to the suit, Musk’s actions allowed him to avoid larger losses when Tesla’s stock price dropped following the release of its fourth-quarter results on January 2, 2023. Perry alleges that Musk benefited improperly by about $3 billion from insider trading profits.
The complaint highlights that Musk sold shares on various dates throughout November and December 2022. It also accuses Tesla’s directors of failing their fiduciary duties by permitting Musk to proceed with the sales.
Furthermore, the lawsuit details that Musk, due to his access to real-time data, had advanced knowledge of the lower-than-expected numbers by mid-November and acted on this information before it became public. This preceded a significant drop in Tesla’s stock value following announcements of vehicle price discounts and disappointing quarterly figures.
The legal challenge seeks to have Musk return the profits from these trades. This case adds to Musk’s ongoing legal issues, including a contested $56 billion pay package and a separate regulatory investigation by the U.S. Securities and Exchange Commission over his acquisition of shares in Twitter, now known as X.
Tesla, incorporated in Delaware, and Musk have yet to respond to these allegations.
