WILMINGTON, Delaware (Reuters) -Elon Musk made billions of dollars selling Tesla shares using insider information, an institutional shareholder charged on Tuesday in a lawsuit asking the court to order Tesla’s CEO to return “illegal profits” to give.
The lawsuit comes two days before a critical vote by Tesla shareholders on whether Musk’s $56 billion pay package should be reinstated, after a Delaware judge threw it out in January because she found Musk had improperly controlled the process .
Musk and his brother, Kimbal Musk, a Tesla executive, sold a combined $30 billion worth of the electric vehicle maker’s stock between late 2021 and late 2022, making money before news that would send the stock tumbling became public, according to the lawsuit. , 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 the social media platform Twitter, which he later renamed X, according to the lawsuit filed in Delaware Chancery Court. Musk also sold Tesla stock when he knew Tesla car deliveries had fallen far below public expectations, the lawsuit said.
Musk and Tesla did not respond to messages seeking comment.
The Employees’ Retirement System of Rhode Island owns about 140,000 shares of Tesla stock. Tesla stock closed at $170.66 on Tuesday, valuing the stake at about $24 million.
A similar lawsuit filed in the same court late last month by Michael Perry, another Tesla shareholder, accused Musk of insider trading when he sold more than $7.5 billion worth of Tesla stock in late 2022.
Musk is in the middle of a regulatory investigation to determine whether he violated federal securities laws when he bought Twitter stock in 2022.
Tuesday’s lawsuit by ERSRI also said Musk had been disloyal to Tesla in several instances, including diverting Tesla employees to work at had bought.
ERSRI was concerned that Tesla’s board of directors was not doing enough to oversee Musk’s conflicts of interest, the fund’s general treasurer said in a statement.
Musk also helped xAI, where he is CEO, hire Tesla employees and divert artificial intelligence (AI) semiconductors headed to Tesla to the X messaging platform and to xAI, the lawsuit alleged.
Last week’s news about the delivery of AI chips caused Musk to prioritize AI-related developments outside of Tesla. In a post on X, Musk said Tesla had no place to store and power the Nvidia AI processors.
(Reporting by Tom Hals in Wilmington, Delaware, and Abhirup Roy in San Francisco; Editing by Leslie Adler)
