A Tesla shareholder has sued Elon Musk, accusing him of making billions of dollars through insider trading and demanding the return of “unlawful profits.”
The lawsuit, filed by the Employees’ Retirement System of Rhode Island (ERSRI), claims Musk sold Tesla stock using insider information.
The lawsuit comes just two days before Tesla shareholders are set to vote on reinstating Musk’s $56 billion pay package, which a Delaware judge voided in January due to Musk’s improper control over the process.
Musk is accused of selling Tesla stock despite knowing vehicle deliveries had fallen below public projections
According to the lawsuit, Musk and his brother, Kimbal Musk, a Tesla director, sold a combined $30 billion in stock between late 2021 and the end of 2022.Â
They allegedly cashed in before negative news about the company became public, causing the stock to drop.
The lawsuit claims Musk sold shares at inflated prices by hiding his intention to use the proceeds to buy the social media platform Twitter, which he later renamed X.
Musk allegedly sold stock, knowing vehicle deliveries had fallen below public projections.
Tesla and Musk have not responded to requests for comment.
ERSRI, which holds about 140,000 shares valued at approximately $24 million, filed the lawsuit in Delaware Chancery Court.Â
Shareholder Michael Perry filed a similar lawsuit last month, accusing Musk of insider trading involving over $7.5 billion in shares sold in late 2022.
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Musk is under regulatory investigation for potentially violating federal securities laws in 2022 when he purchased Twitter stock.
The ERSRI lawsuit also alleges Musk’s disloyalty.
This includes diverting employees to work at X and arranging for Tesla to pay for advertising on Twitter after he acquired the platform.Â
ERSRI expressed concerns about Tesla’s board of directors not adequately overseeing Musk’s conflicts of interest.
The lawsuit further claims Musk diverted artificial intelligence semiconductors intended for Tesla to X and xAI, another company he leads.
This move has raised concerns about Musk prioritizing AI development outside of Tesla.
Musk recently posted on X that Tesla had no place to store and activate the Nvidia AI processors.
