Tesla shareholder sues Musk to return billions in alleged unlawful profits

Tesla shareholder sues Musk to return billions in alleged unlawful profits

WILMINGTON, Del. (Reuters) – Elon Musk made billions of dollars selling Tesla stock using inside information, an institutional shareholder charged in a lawsuit filed Tuesday, asking the court to order the Tesla CEO to make restitution “illegal profits”.

The lawsuit comes two days before a critical vote by Tesla shareholders on whether to reinstate Musk’s $56 billion pay package, after a Delaware judge struck it down in January because she found that Musk had poorly controlled the process.

Musk and his brother, Tesla executive Kimbal Musk, sold a combined $30 billion of the electric vehicle maker’s stock between late 2021 and late 2022, cashing out before news that could send shares tumbling was announced. made public, according to the lawsuit. , which was filed by the Employees’ Retirement System of Rhode Island (ERSRI).

Musk sold the shares at artificially inflated prices by concealing his intention to use the proceeds to buy the social media platform Twitter, which he then renamed X, according to the lawsuit filed in U.S. Chancery Court. Delaware. Musk also sold Tesla stock despite knowing that Tesla car deliveries had fallen well below public projections, according to the lawsuit.

Musk and Tesla did not respond to messages seeking comment.

The Rhode Island Employees’ Retirement System owns approximately 140,000 Tesla shares. Tesla stock closed at $170.66 on Tuesday, valuing the stake at about $24 million.

A similar lawsuit filed in the same court late last month by Michael Perry, another Tesla shareholder, accused Musk of insider trading when he sold more than $7.5 billion worth of Tesla stock. Tesla at the end of 2022.

Musk is in the midst of a regulatory investigation into whether he violated federal securities laws in 2022 when he purchased Twitter stock.

The ERSRI lawsuit filed Tuesday also said Musk had been disloyal to Tesla on multiple occasions, including diverting Tesla employees to work at platform.

ERSRI is concerned that Tesla’s board is not doing enough to oversee Musk’s conflicts of interest, the fund’s general treasurer said in a statement.

Musk also helped xAI, of which he is CEO, hire Tesla employees and divert artificial intelligence (AI) semiconductors intended for Tesla to the X messaging platform and to xAI, according to the lawsuit.

Last week’s announcement of AI chip shipments raised concerns that Musk was prioritizing AI-related development outside of Tesla. In an article on X, Musk said that Tesla had no place to store and power Nvidia AI processors.

(Reporting by Tom Hals in Wilmington, Delaware, and Abhirup Roy in San Francisco; editing by Leslie Adler)

Source Reference

Latest stories