Tesla's CEO Elon Musk is facing yet another challenge as an institutional shareholder has reportedly filed a lawsuit accusing him of making billions by selling Tesla stock using insider information. The lawsuit, filed on Tuesday, demands the return of "unlawful profits" made by Musk.
This development comes just a day before the luxury carmaker's shareholder meeting, wherein the majority votes will decide if Elon Musk's $56 Billion pay package gets a green flag or not.
The conflict over the pay deal has long been in the news. Earlier this year, a Delaware judge had even invalidated the pay package.
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According to a lawsuit filed by the Employees' Retirement System of Rhode Island (ERSRI), Elon Musk and his brother Kimbal Musk sold a combined $30 billion worth of Tesla stock between late 2021 and 2022. The lawsuit alleges that they made these sales before the release of news that would drop the stock price, as per a report by Reuters.
The lawsuit, filed in Delaware Chancery Court, claimed that Musk sold Tesla shares at high prices and failed to disclose his decision of using the proceeds to buy Twitter (which he later renamed X.)
It also alleged that Musk sold Tesla's stocks while knowing that car deliveries were much lower than what was publicly expected.
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The Employees' Retirement System of Rhode Island owns about 140,000 Tesla shares, worth roughly $24 million as of Tuesday when the stock closed at $170.66.
However, this is not the first time the luxury car maker has faced such allegations. Last month, another Tesla shareholder, Michael Perry, sued Musk in the same court for insider trading after he sold over $7.5 billion worth of Tesla shares in late 2022.
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