A Tesla shareholder has filed a lawsuit against CEO Elon Musk, accusing him of insider trading. The lawsuit, filed by shareholder Michael Perry on Thursday in Delaware Chancery Court, claims that Musk sold over $7.5 billion worth of Tesla shares in late 2022 before the company announced potentially disappointing production and delivery numbers.
Perry alleges that Musk sold the shares in November and December 2022, before the company’s fourth-quarter results were made public on January 2, 2023. According to the lawsuit, Tesla’s share price dropped significantly after the numbers were released, and Perry claims that Musk “improperly benefited” by about $3 billion in insider profits.
The lawsuit argues that Musk used his position at Tesla to gain an unfair advantage and breached his fiduciary duties. Perry is asking the court to order Musk to return the profits he made from these trades.
The lawsuit also accuses Tesla’s directors of failing in their duties by allowing Musk to sell the shares. Perry claims that Musk knew about the lower-than-expected numbers in mid-November through his access to real-time data and sold his shares before this information was made public.
After Tesla announced vehicle price discounts, which raised concerns about demand, and released the disappointing numbers in January, the company’s stock price fell sharply. Perry argues that if Musk had waited to sell his shares until after this news was released, he would have made significantly less money.
This lawsuit adds to Musk’s legal troubles. Tesla shareholders are set to vote on June 13 on whether to approve Musk’s $56 billion pay package, which a Delaware judge voided in January, citing Musk’s improper control over the process.
Additionally, Musk is under investigation by the U.S. Securities and Exchange Commission (SEC) to determine if he violated federal securities laws in 2022 when he bought stock in Twitter, which he later renamed X. Musk has accused the SEC of harassing him with unnecessary investigations.
Musk and the SEC have been in a long-standing conflict since 2018 when he tweeted about having “funding secured” to take Tesla private. In another lawsuit, shareholders have accused Musk of defrauding X investors by delaying the disclosure of his stake in the social media company to buy shares at lower prices.
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