Tesla CEO Elon Musk was accused of insider trading in a lawsuit filed Thursday by a Tesla shareholder in Delaware Chancery Court.
Shareholder Michael Perry claims in the filing that Musk sold over $7.5 billion of shares of his electric car company in late 2022 before potentially disappointing production and delivery numbers were made public.
Perry said Tesla’s stock took a nose dive after the company’s fourth-quarter numbers went public on Jan. 2, 2023, and claimed that Musk “improperly benefited” by about $3 billion in insider profits.
“Musk exploited his position at Tesla, and he breached his fiduciary duties to Tesla,” the lawsuit said, per Reuters. Perry asks the court to instruct Musk to return the profits he made from the trades.
The lawsuit says Musk sold the shares on various dates in November 2022 and December 2022.
Perry also accused Tesla’s directors of breaching their fiduciary duty by allowing Musk to sell the shares.
Musk and Tesla did not immediately respond to Fox Business’ request for comment.
The lawsuit alleges that Musk, who in 2022 said demand for Tesla vehicles was “excellent,” learned about the underwhelming production and delivery numbers in mid-November via his access to real-time data, and sold his shares before the information went public.
When Tesla announced it would discount vehicle prices and released the data in January, analysts raised concerns that the company’s cars weren’t in demand, and Tesla’s stock price dropped.
“Had (Musk) waited to make these sales until after the release of material adverse news … his sales would have netted him less than 55% of the amounts realized from his November and December 2022 sales,” the lawsuit said.
The lawsuit comes as Musk has urged Tesla shareholders to vote to reinstate his $56 billion pay package after a Delaware judge struck it down in January.
The judge ruled that Tesla’s board of directors didn’t adequately disclose their personal ties to Musk and that the company was on pace to meet most of the plan’s benchmarks. Due to the lack of those disclosures to shareholders, the compensation plan’s excessive size resulted in it being voided by the judge.
Musk responded to the ruling by pushing for Tesla to change its state of incorporation from Delaware to Texas, which is another item that is being presented to shareholders for them to vote on at the annual meeting.
Musk also faces a Securities and Exchange Commission (SEC) probe into his 2022 acquisition of Twitter, the social media platform he rebranded as X. Musk has said the SEC is trying to “harass” him with undeserved investigations.
A separate shareholder lawsuit has accused Musk of defrauding X investors by delaying disclosure of his stake in the social media company to amass shares at lower prices.
