A Tesla shareholder filed a lawsuit in Delaware Chancery Court on Thursday, accusing CEO Elon Musk of insider trading. The lawsuit alleges that Elon Musk sold over $7.5 billion of Tesla shares in late 2022 before the company’s disappointing production and delivery numbers were made public.
According to shareholder Michael Perry, Tesla’s share price dropped significantly after the fourth-quarter numbers were released on Jan. 2, 2023. Michael Perry claimed that Elon Musk profited improperly by about $3 billion from insider trading.
The lawsuit accuses Elon Musk of exploiting his position at Tesla and breaching his fiduciary duties to the company. Michael Perry is seeking the court’s direction for Elon Musk to return the profits made from the trades.
The lawsuit also implicates Tesla’s directors for allegedly allowing Elon Musk to sell the shares.
Neither Elon Musk nor Tesla immediately responded to a Reuters request for comment.
The lawsuit alleges that Elon Musk, who previously stated that demand for Tesla vehicles was “excellent,” became aware of lower-than-expected numbers in mid-November 2022. He allegedly sold his shares before this information became public.
Tesla’s stock experienced a significant decline following news of vehicle price discounts and the release of the numbers in January.
The lawsuit marks the latest legal challenge for Elon Musk, who is already facing opposition from Tesla shareholders regarding his $56 billion pay package. Additionally, he is under regulatory scrutiny for his stock purchases in social media platform Twitter, which he later renamed X.
Elon Musk has been involved in a longstanding feud with the U.S. Securities and Exchange Commission since 2018 when he tweeted about taking Tesla private. Another shareholder lawsuit accuses Elon Musk of defrauding X investors by delaying disclosure of his stake in the company.
