A Tesla shareholder has filed a lawsuit against CEO Elon Musk, accusing him of illegally profiting billions of dollars through insider trading.
On May 30, Michael Perry, a Tesla shareholder, submitted a lawsuit in a Delaware court, where Tesla is headquartered. Perry alleges that Musk violated insider trading laws by selling more than $7.5 billion worth of Tesla shares in the final two months of 2022.
According to the lawsuit, Perry claims Musk sold these shares in anticipation of Tesla’s disappointing production and delivery figures for the fourth quarter of 2022. The company’s financial results for that period subsequently caused Tesla’s stock to drop in early 2023. Perry estimates that Musk unlawfully gained around $3 billion from these sales.
“Musk abused his position at Tesla and violated his obligations to the company,” Perry stated in the lawsuit. He is asking the court to require Musk to return the profits made from these share sales.
In 2022, Musk publicly stated that demand for Tesla vehicles remained strong. However, Perry contends that by mid-November of that year, Musk knew the actual production numbers were falling short, based on real-time internal reports. This, Perry argues, motivated Musk to sell the shares before the disappointing results were made public.
“Had Musk waited to sell his shares after Tesla’s fourth-quarter earnings report, his profits would have been halved,” the lawsuit claims.
This lawsuit is just the latest in a series of legal challenges Musk is facing. Currently, several Tesla shareholders are also voicing concerns over Musk’s massive compensation package. On June 13, Tesla shareholders will vote on whether to approve Musk’s $56 billion pay package, a compensation deal that has stirred controversy since its inception.
Earlier this year, a Delaware judge declared that Musk’s compensation plan was void, stating that Musk had unduly influenced board members to secure the bonus.
In addition to these challenges, Musk remains under investigation by U.S. authorities over potential violations of securities laws tied to his 2022 acquisition of shares in the social media platform X (formerly known as Twitter). Musk has previously expressed frustration with the U.S. Securities and Exchange Commission (SEC), accusing them of harassing him with baseless investigations.
Musk’s turbulent relationship with U.S. regulators dates back to a 2018 incident, when he tweeted that he had secured funding to take Tesla private. This claim led to an SEC investigation, which resulted in Musk paying a fine and stepping down as Tesla’s chairman.
With new lawsuits and investigations emerging, Musk’s legal battles seem far from over, adding further complications to his already complex role as the head of multiple high-profile companies.
