Tesla Shareholder Sues Musk, Alleging $7.5 Billion Insider Trading Scheme

• A Tesla shareholder has filed a lawsuit accusing Elon Musk of insider trading, alleging he sold over $7.5 billion worth of Tesla stock in late 2022 before the release of disappointing production and delivery figures, resulting in a $3 billion insider gain.
• The lawsuit claims Musk sold the shares between November and December 2022, benefiting from real-time data on lower-than-expected production numbers, which caused Tesla's stock price to drop sharply after the release of fourth-quarter financial results in January 2023.
• The complaint also alleges that Tesla's directors breached their fiduciary duties by allowing Musk to sell the shares, and it coincides with other legal challenges Musk faces, including shareholder resistance to his $56 billion compensation plan and a regulatory investigation into his 2022 Twitter acquisition.

When Elon Musk, the CEO of Tesla, sold more than $7.5 billion worth of the company's stock in late 2022, a shareholder filed a lawsuit on Thursday accusing Musk of engaging in insider trading. The shareholder claims that Musk sold the shares prior to the release of potentially discouraging production and delivery figures.

In the case filed in Delaware Chancery Court, shareholder Michael Perry stated that Musk "improperly benefited" by around $3 billion in insider gains and that Tesla's share price fell following the release of the company's fourth-quarter financial results on January 2, 2023.

The complaint claims that Musk sold the shares between November 2022 and December 2022 on a number of different days. It also claims that by permitting Musk to sell the shares, Tesla's directors violated their fiduciary duties.

According to Perry's claim, Musk-who said in 2022 that there was "excellent" demand for Tesla cars-sold his shares before the information became public in mid-November after learning about the lower-than-expected figures via real-time data access.

Tesla's stock fell precipitously when the statistics were revealed in January and reports of car pricing reductions that raised questions about demand surfaced.

Musk Faces Legal Challenges Amid Shareholder Discontent and Regulatory Scrutiny

The complaint is Musk's most recent legal challenge. It coincides with resistance to Musk from certain Tesla shareholders who will vote on June 13 on whether to approve his $56 billion compensation plan, which was ruled unlawful by a Delaware judge in January for improper process control. Delaware is where Tesla is incorporated.

In addition, Musk is currently the subject of a regulatory investigation to determine if he violated federal securities laws in 2022 when he purchased ownership in the social media company Twitter, which he then rebranded as X. Musk stated that the U.S. The Securities and Exchange Commission attempted to "harass" him by conducting unauthorized inquiries.

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