Elon Musk faces lawsuit from Tesla shareholder over accusations of selling company stocks

According to an institutional shareholder's lawsuit filed on Tuesday, Elon Musk made billions of dollars by selling Tesla stocks. Read on to know more.

Published on Jun 13, 2024  |  06:37 PM IST |  39.5K
Image Courtesy: Wikimedia Commons
Image Courtesy: Wikimedia Commons
Key Highlight
  • Elon Musk is being sued by a Tesla stakeholder for billions in allegedly illegal profits
  • The case has been filed in Delawarw court

In a lawsuit filed on Tuesday, an institutional shareholder claimed that Elon Musk had profited billions of dollars while selling Tesla stock by exploiting insider information. The shareholder requested that the court order the CEO of Tesla to return unlawful profits, according to Money Control.

Musk is now facing a legal challenge from a Tesla shareholder 

The lawsuit was filed just two days before a crucial shareholder vote on whether or not to restore Musk's compensation package. If Tesla shareholders decide not to reinstate Elon Musk's USD 44.9 billion compensation package, the CEO may follow through on his threats to transfer artificial intelligence research to another company. Or he might even decide to leave.

What does the lawsuit say?

According to the lawsuit filed by the Employees' Retirement System of Rhode Island (ERSRI), Musk and his brother Kimbal Musk, a director of Tesla, sold a total of $30 billion in the company's stock between late 2021 and the end of 2022, profiting before information that would have caused the stock to plummet became public.

According to reports, by hiding his intention to utilize the money received to purchase the social media site Twitter, which he subsequently renamed X, Musk sold the shares at inflated rates. The lawsuit further claimed that Musk traded Tesla stock after realizing that public estimates for the company's automobile deliveries had significantly dropped.

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Following a previous case in which Musk was accused of insider trading at Tesla, this lawsuit is the second challenge Musk is facing in Delaware court from a shareholder of Tesla. In addition, Musk is the focus of an investigation that will look into whether or whether he may have violated federal securities laws in 2022 when he purchased Twitter stock.

ALSO READ: President Joe Biden's son Hunter Biden convicted on three criminal counts in gun trial; could face 25 years in prison

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