Tesla CEO Elon Musk is facing a lawsuit from a shareholder, who is alleging insider trading activities that resulted in profits of approximately $7.5 billion. The lawsuit claims that Musk sold shares before the public release of disappointing production and delivery numbers, leading to a significant drop in Tesla’s stock price. Shareholder Michael Perry filed the lawsuit in Delaware Chancery Court, accusing Musk of breaching his fiduciary duties by selling the shares based on non-public information.
According to the lawsuit, Musk sold the shares in late 2022 on various dates, prior to the announcement of Tesla’s fourth-quarter numbers in January 2023, which caused the stock to plummet. Perry claims that Musk benefited improperly by approximately $3 billion in insider profits. The lawsuit also implicates Tesla’s directors for allegedly allowing Musk to engage in the insider trading activities.
The legal action comes amidst ongoing challenges for Musk, including opposition from Tesla shareholders regarding his $56 billion pay package, which was previously voided by a Delaware judge. Additionally, Musk is under investigation for potential violations of federal securities laws related to his stock purchases in the social media platform Twitter, now known as X. The lawsuit is the latest development in a series of legal battles involving Musk and Tesla, adding to the regulatory scrutiny faced by the billionaire entrepreneur.
