A Tesla investor is suing Elon Musk, claiming he engaged in insider trading in 2022.
The plaintiff, Michael Perry, said Musk knew Tesla was going to disappoint the market with its fourth-quarter earnings for the fiscal year 2023. The complaint states that Musk hyped up investors’ expectations, noting when the Tesla CEO told investors in a previous earnings call that the fourth quarter would be “record breaking” and “we expect to sell every car we make as far into the future as we can see.” At the same time, the lawsuit said, Musk had access to real-time data contradicting his statements.
Before the markets could learn Tesla would fall short of Musk’s publicly-stated goals for the company’s fourth-quarter earnings, the plaintiff said, Musk sold off a large chunk of his own shares in the company worth $7.5 million.
“Because E. Musk sold this stock before the non-public information in his possession could be publicly disclosed and affect the Company’s stock price, E. Musk improperly benefited from this breach of fiduciary duty,” the Tesla shareholder’s complaint said.
The lawsuit, filed Thursday in Delaware Chancery Court, suggests that Musk sold the Tesla stock to refinance his Twitter stock, the social media platform he bought for $44 billion in 2022 and renamed X. It also names members of Tesla’s board of directors as defendants for allegedly “breaching their fiduciary duties by allowing defendant Musk to circumvent Tesla’s Insider Trading Policy.”
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