Title: Tesla CEO Elon Musk Faces $7.5 Billion Insider Trading Lawsuit

In a recent lawsuit filed in Delaware Chancery Court, Tesla investor Michael Perry accused CEO Elon Musk of insider trading and breaching his fiduciary duties to the company and its shareholders. Perry alleges that Musk had nonpublic information about Tesla's production and delivery numbers, specifically a miss on fourth-quarter targets in 2022, when he sold over $7.5 billion in stock.

According to the lawsuit, Musk used this insider knowledge to bolster his buyout of the social media platform X, formerly known as Twitter. Perry claims that Musk "exploited his position at Tesla" and profited from his alleged misconduct and exploitation of material inside information.

The investor has requested that Judge Kathaleen St. J. McCormick order Musk, the world's second-richest person, to return the profit from the alleged improper trading back to Tesla.

Elon Musk's lawyer, Alex Spiro, has not provided immediate comment on the lawsuit.

This accusation of insider trading is the latest dispute surrounding Elon Musk, his stock transactions, and public statements. Earlier this week, Musk agreed to a third round of questioning by the US Securities and Exchange Commission (SEC) regarding his Twitter acquisition and whether he properly disclosed his initial stake in the company.

Musk has been under scrutiny from the SEC since a previous incident involving a Twitter post about taking Tesla private, which resulted in a fine and the requirement of having a "Twitter sitter" to monitor his communications regarding the company.

In addition to Musk, Perry also named Tesla directors as defendants in the lawsuit, alleging that they failed to ensure Musk's compliance with legal obligations related to stock sales and company performance statements.

The lawsuit claims that Musk had touted Tesla's quarterly performance in 2022, expressing confidence in the company's excellent demand and ability to sell every car they make. However, in November 2022, Musk allegedly learned that Tesla would not meet its targets for the quarter. Prior to the public announcement in January 2023, Musk reportedly sold $7.53 billion worth of shares.

Upon the release of the numbers, Tesla's stock fell by 12%, resulting in significant financial losses for investors.

This is not the first time Judge McCormick has encountered Elon Musk. She previously presided over a case involving Musk's attempt to back out of buying Twitter. In January, she nullified his $56 billion pay package, deeming that Tesla directors had a conflict of interest and that the company had not properly disclosed the executive compensation plan.

Tesla is planning to have investors vote on the pay package a second time at the upcoming annual meeting on June 13, which could potentially bolster their legal appeal against McCormick's decision.

Proxy adviser Institutional Shareholder Services has urged investors to reject the pay package, adding to the mounting challenges Tesla and Musk are currently facing.

The case, titled Perry v. Musk, is ongoing in Delaware Chancery Court (Wilmington).

For further information, please contact the reporter at jfeeley@bloomberg.net.

Edited by Misyrlena Egkolfopoulou.