A Tesla investor accuses Elon Musk of making insider deals worth $7.5 billion

• Tesla investor Michael Burry has sued Elon Musk for insider trading.
• Musk was accused of selling $7.5 billion worth of Tesla shares, knowing that the company would not achieve its fourth-quarter goals.
• He claimed that the value of the shares would be 55% less if Musk sold them after the release of the fourth quarter results.

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

Investor Michael Perry claimed in his lawsuit that Musk knew Tesla would lose Forecast for the fourth quarter of that year regarding vehicle deliveries It sold $7,530,113,926 worth of Tesla shares in November and December 2022 before publishing the financial report in January 2023.

The alleged lawsuit Musk’s deals “would have earned him less than 55% of the amounts realized” if they had been completed after announcing the financial quarter’s results to shareholders.

“Musk’s inside profits from his November and December sales amounted to approximately $3 billion based on the January 3, 2023 closing price of $108.10 per share,” the lawsuit claimed.

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

Perry alleged in the lawsuit that Musk had access to information about his company that was not yet available to the public, which led to the sale of his shares.

The lawsuit cited statements Musk later made in a 2023 earnings call, in which the Tesla CEO said the company had a “real-time daily update of how many cars were ordered yesterday, how many cars were produced yesterday” and that the data “has no latency.” Or delay.

Additionally, the lawsuit alleged that “a change in Tesla’s production and delivery logistics” at the time should have increased the likelihood that Musk would have access to material, 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 that year in October 2022. Earnings call.

“So, the fourth quarter is looking very good,” Musk said on the call, according to a transcript published by The Motley Fool.

Musk also said: “I can’t stress this enough, we have excellent demand in the fourth quarter, and we expect to sell every car we make going forward as we see it.”

Catcher Larry Ellison moment?

Shareholders can bring a derivative lawsuit against a company’s directors if they believe there has been a breach of duty.

A remarkable case has emerged 2001 When Larry Ellison, then-CEO of Oracle, was accused of selling nearly $900 million worth of stock before his company revealed it would not meet earnings expectations, New York times mentioned.

According to the report, Ellison reached a settlement and agreed to pay $100 million to charity.

These lawsuits are not uncommon but are often dismissed at an early stage, James Park, a securities regulation expert at the University of California, Los Angeles, told Business Insider.

“But in some cases, like Ellison’s, the courts refuse to dismiss the case, so there is an incentive to settle rather than risk a trial,” he added.

Musk has been accused of insider trading before.

Last year, a group of investors filed a class-action lawsuit against the billionaire, accusing him of this Manipulating the price of DogecoinCryptocurrency Ornate Shiba Inu.

The lawsuit, which was filed in June 2023, is still ongoing.

Musk is also struggling to maintain a $55 billion pay package after Delaware court counsel Kathleen McCormick voided the agreement in January. McCormick, described by a colleague as “steadfast” and with a record of siding with sellers in corporate takeovers, will also review Perry’s lawsuit.

McCormick’s ruling has caused tension for Musk in Delaware, and he has been promoting a move to establish Tesla in Texas.

Since the pay package was sunk, investment funds, shareholders and a proxy advisory firm have urged Tesla investors to vote against reinstating Musk’s deal.

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