Musk is now facing a legal challenge from a Tesla shareholder who argues that he should return billions of dollars
Another day, another story about Elon Musk and his antics at Tesla $TSLA. Today, instead of being about his enormous pay package and the uphill battle he is facing to secure $56 billion in compensation, it’s about yet another legal battle he’s due to face. Musk is now facing a legal challenge in Delaware from a Tesla shareholder who argues that he should return billions of dollars in alleged “unlawful profits” that he pocketed after selling shares in the American electric vehicle maker.
A case has been filed in Delaware arguing that Musk should repay the profit he made after offloading billions of dollars worth of Tesla stock, reports Reuters. The lawsuit, which was filed by the Employees’ Retirement System of Rhode Island alleges that Musk sold the stock at an inflated price before news of dwindling Tesla deliveries was made public, as Reuters reports:
Elon Musk made billions of dollars by selling Tesla stock using insider information, an institutional shareholder accused in a lawsuit filed on Tuesday, asking the court to direct the Tesla CEO to return “unlawful profits.”
Musk and his brother, Kimbal Musk, a Tesla director, sold a combined $30 billion in the electric vehicle maker’s stock between late 2021 and the end of 2022, cashing in before news that would cause the stock to fall became public, according to the lawsuit, which was filed by the Employees’ Retirement System of Rhode Island (ERSRI).
Musk sold the shares at artificially inflated prices by concealing his plan to use the proceeds to buy social media platform Twitter $TWTR, which he later renamed X, according to the lawsuit, filed at the Delaware Chancery Court. Musk also sold Tesla stock when he knew that deliveries of Tesla cars had fallen far below public projections, the lawsuit said.
The lawsuit is the second challenge from a Tesla shareholder that Musk is facing in Delaware court and follows a similar case that accuses Musk of insider trading at Tesla. Musk is also facing a probe that is set to determine if he may have broken federal securities laws in 2022 when he bought stock in Twitter.
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