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Tesla investor accuses Musk of insider trading

Tesla investor accuses Musk of insider trading

Musk Insider

Elon Musk, the CEO of SpaceX and Tesla, is facing a lawsuit from a Tesla shareholder accusing him of insider trading worth $7.5 billion. The lawsuit, filed by shareholder Michael Perry in Delaware Chancery Court on Thursday, claims that Musk sold over $7.5 billion worth of Tesla shares in late 2022, just before the company’s disappointing production and delivery numbers were made public. According to the lawsuit, Tesla’s stock experienced a significant drop after the fourth-quarter numbers were released on January 2, 2023.

Perry alleges that Musk profited improperly by approximately $3 billion through these trades, exploiting his position at Tesla and breaching his fiduciary duties to the company. The lawsuit details that Musk sold shares on various dates in November and December 2022. Perry also accuses Tesla’s directors of breaching their fiduciary duty by allowing these sales.

Perry’s filing asserts that Musk learned about the underwhelming production and delivery numbers in mid-November via his access to real-time data and subsequently sold his shares before this information became public.

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musk accused of insider trading

When Tesla eventually announced price discounts and released the production data in January, analysts expressed concerns over the demand for the company’s cars, leading to a drop in Tesla’s stock price.

The lawsuit claims that if Musk had waited to sell his shares until after the adverse news was released, he would have netted less than 55% of the profit realized from his November and December 2022 sales — and now it’s 2024. This lawsuit comes when Musk has been urging Tesla shareholders to vote to reinstate his $56 billion pay package, struck down by a judge in January. The judge ruled that Tesla’s board of directors had not sufficiently disclosed their personal ties to Musk, leading to the ruling that the compensation plan’s excessive size was unjustified.

Additionally, Musk faces an ongoing Securities and Exchange Commission probe into his 2022 acquisition of Twitter, which he has rebranded as “X.” Musk has accused the SEC of harassment through undeserved investigations. A separate shareholder lawsuit has also accused Musk of defrauding X investors by delaying the disclosure of his stake in the social media company to amass shares at lower prices. Neither Musk nor Tesla has responded to requests for comment on the matter.

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