Tesla investor Elon Musk accused of $7.5B worth of insider trades

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  • Tesla investor Michael Perry is suing Elon Musk for insider trading.
  • He alleged that Musk sold $7.5B worth of Tesla stock knowing the company would miss Q4 targets.
  • He alleges that if Musk were to sell them after Q4 results were released, the stock would be worth 55% less.

A Tesla investor accused Elon Musk of using his company’s inside information to sell $7.5 billion worth of Tesla stock in 2022, according to a lawsuit filed Thursday in Delaware Chancery Court.

The investor, Michael Perry, alleges in his lawsuit that Musk knew Tesla would miss out Expectations for the fourth quarter of the year on vehicle deliveries It sold $7,530,113,926 worth of Tesla stock in November and December 2022, ahead of its January 2023 financial report.

The suit alleges After quarterly results were released to shareholders, Musk’s trades “would have netted him less than 55% of the amount realized”.

“Musk’s internal gain on November and December sales was approximately $3 billion based on the January 3, 2023 closing price of $108.10 per share,” the suit alleges.

Attorneys for Perry and Musk did not immediately respond to a request for comment.

Perry alleges in the lawsuit that Musk must have obtained information about his company that was not yet available to the public that led to the sale of his stock.

Citing reports Musk made on the 2023 earnings call, the Tesla CEO said “how many cars were ordered yesterday, how many cars were produced yesterday” and that the data “has a daily real-time update.” No delays or delays.

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Additionally, the suit alleges that “a change in Tesla’s manufacturing and distribution logistics” at the time should have given Musk access to non-public information about Tesla’s fourth-quarter production and delivery numbers.

Perry also accused Musk of misleading shareholders about what to expect in the fourth quarter of the year in October 2022. Revenue call.

“So, Q4 is pretty good,” Musk said on the call, according to a transcript published by The Motley Fool.

“I can’t stress enough,” Musk added, “that we have great demand for the Q4 and expect to sell every car we see in the near future.”

Musk’s Larry Ellison moment?

Shareholders can initiate a derivative suit against the directors of a company if they believe that there has been a breach of duty.

A notable case came up 2001 Oracle’s CEO at the time, Larry Ellison, was accused of selling $900 million worth of stock when it revealed his company was not meeting revenue expectations. The New York Times reported.

Ellison reportedly settled and agreed to pay $100 million to charity.

James Park, a securities regulatory expert at the University of California, Los Angeles, told Business Insider that these cases are not uncommon, but are often dismissed at an early stage.

“But in some cases, like Ellison, courts refuse to dismiss the case, and then there’s an incentive to settle rather than go to trial,” he said.

Musk has previously been accused of insider trading.

Last year, a group of investors filed a class action lawsuit against the billionaire, accusing him of wrongdoing Manipulating the price of DogecoinShiba Inu Cryptocurrency.

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The case, filed in June 2023, is still ongoing.

Musk is fighting to keep his $55 billion pay package after Delaware Chancery Court President Kathleen McCormick struck down the deal in January. McCormick, who was “pushed” by a colleague and sided with sellers in corporate acquisitions, will review Perry’s case.

McCormick’s ruling has soured Musk in Delaware and has moved Tesla to incorporate in Texas.

As the pay package sinks, investment funds, shareholders and a proxy advisory firm have urged Tesla investors to vote against reinstating Musk’s contract.

Investors will meet on June 13 to vote on the package and a proposal to move Tesla’s state of incorporation from Delaware to Texas.

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