Shareholder files lawsuit against Elon Musk, alleges $7.5bn insider trading

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A lawsuit has been filed in Delaware Chancery Court by a Tesla investor accusing Elon Musk of exploiting insider information about his firm to sell $7.5 billion worth of Tesla stock in 2022.

The shareholder, Michael Perry, alleged that Musk “improperly benefited” by around $3 billion in insider gains.

Also he said Tesla’s share price fell following the release of the company’s fourth-quarter financial results on January 2, 2023.

Perry also alleged that by permitting Musk to sell the stock, the Tesla directors had violated their fiduciary responsibility.

The lawsuit alleged that if Musk had made his trades after the quarter’s results were disclosed to shareholders, they “would have netted him less than 55% of the amounts realised.”

According to him, “Musk’s insider profits for his November and December sales were approximately $3 billion based on the January 3, 2023 closing price of $108.10 per share.”

The concerns are that company’s cars weren’t in demand when Tesla revealed the data and said it would lower vehicle costs in January, and the company’s stock price fell as a result.

It was alleged that, “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 realised from his November and December 2022 sales.”

In consequence, Musk has asked Tesla shareholders to cast votes in favour of restoring his $56 billion compensation plan, which was overturned in January by a Delaware judge.

The case, which represents the most recent legal entitlements, comes at a time when some Tesla shareholders oppose Musk and will vote on June 13 to approve or reject his $56 billion compensation plan.

This wad ruled invalid in January by a Delaware judge who discovered that Musk had inappropriately controlled the process.

Earlier report stated that shortly after lowering pricing in the US, Tesla announced steep price reductions in China and Germany as it deals with diminishing sales and escalating competition in key countries.