Tesla CEO Elon Musk had inside information about Tesla’s impending miss on production and delivery numbers when he sold more than $7.5 billion in stock in 2022, according to a lawsuit filed by shareholder Michael Perry, reports Bloomberg.

Insider Knowledge Allegations

Michael Perry, a Tesla investor, filed a lawsuit in Delaware Chancery Court, accusing Musk of having nonpublic information about Tesla’s fourth-quarter targets. Perry claims that Musk knew Tesla would miss these targets and acted on this knowledge to sell a significant amount of stock.

The Lawsuit Details

The lawsuit suggests that Musk’s decision to sell shares was influenced by his awareness of the upcoming shortfall. This accusation, if proven true, could have serious implications for Musk and Tesla. Insider trading, the act of trading a public company’s stock based on material, nonpublic information, is illegal and can lead to severe penalties.

Financial Impact

In 2022, Musk sold over $7.5 billion worth of Tesla stock. The timing of this sale, now under scrutiny, coincides with the period just before Tesla announced it would miss its production and delivery targets for the fourth quarter. This miss could potentially affect the company’s stock price and investor confidence.

What’s Next?

The lawsuit will proceed in Delaware Chancery Court, where both sides will present their evidence. If Perry’s allegations are substantiated, Musk could face legal consequences and potential financial penalties. This case highlights the importance of transparency and ethical conduct in corporate governance.

EVXL’s Take

The allegations against Elon Musk underscore the need for stringent oversight and regulation in the stock market. For Tesla, maintaining investor trust is crucial, especially in a competitive industry like electric vehicles. This case serves as a reminder of the critical role of ethical behavior in sustaining market integrity and investor confidence.