Elon Musk Faces Insider Trading Allegations from Tesla Shareholder

Elon Musk, the high-profile CEO of electric vehicle maker Tesla, is facing serious allegations of insider selling as a shareholder lawsuit claims he exploited non-public information for personal gain. Filed in the Delaware Chancery Court by Tesla shareholder Michael Perry, the suit accuses Musk of selling $7.5 billion worth of Tesla shares prior to the release of disappointing production and delivery numbers.

Lawsuit Details and Allegations

According to the complaint, Musk's massive stock sale took place in November and December of 2022, ahead of the public announcement of Tesla's fourth-quarter results. Perry alleges that the subsequent release of the underwhelming statistics on January 2, 2023, saw Tesla's shares plummet, implying that Musk avoided greater losses by preemptively selling his shares. The lawsuit suggests Musk improperly benefited by approximately $3 billion from his early trades.

The legal document points out that Musk, through his role at Tesla, potentially had real-time data about the company's performance, stating that he learned about the disappointing figures in mid-November. By selling before the rest of the market was aware, Perry claims Musk breached his fiduciary duties to Tesla and its shareholders.

Additionally, the lawsuit accuses the Tesla board of directors of failing in their duty by allowing Musk to sell the shares and calls for Musk to return his profits to the company.

Musk's Legal and Regulatory Troubles

Elon Musk's legal issues do not stop with this lawsuit. The complaint comes amidst Musk's urging of Tesla shareholders to reevaluate his significant pay package which faced a judicial setback, being struck down by a Delaware judge who found disclosures concerning Musk's relationships with board members to be insufficient. Furthermore, the CEO's 2022 acquisition of social media platform Twitter, which he rebranded as X, has attracted an SEC investigation, with Musk alleging that the SEC is unjustly targeting him.

A different shareholder lawsuit has also emerged, accusing Musk of defrauding investors in company X by not timely disclosing his stake in the business, potentially allowing him to buy shares at a lower price.

Musk and Tesla have not issued responses to requests for comments on the suit.

Tesla, Musk, Lawsuit