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An individual who holds shares in Tesla has filed a lawsuit against CEO Elon Musk, alleging insider trading.

The lawsuit claims that Elon Musk sold more than $7.5 billion worth of shares in the electric car manufacturer in late 2022, prior to the public release of potentially underwhelming production and delivery figures.

Lawsuit Accuses Elon Musk of Insider Trading

According to a lawsuit filed in Delaware Chancery Court, shareholder Michael Perry alleges that Tesla's share price experienced a significant decline following the release of the company's fourth-quarter numbers on Jan. 2, 2023.

In a story of Reuters, Perry further claims that Musk received approximately $3 billion in insider profits, which he believes were obtained in an improper manner.

Perry also criticized Tesla's directors for allegedly failing in their fiduciary duty by permitting Musk to sell the shares.

Tesla Stock Dips Amid Concerns Over Vehicle Demand

After Tesla's announcement of discounted vehicle prices and the release of data in January, experts expressed concerns about the demand for the company's cars, leading to a drop in Tesla's stock price.

"If (Musk) had delayed these sales until after the release of significant negative news ... his sales would have only amounted to less than 55% of what he gained from his sales in November and December 2022," stated the lawsuit.

The lawsuit arises as Musk has been urging Tesla shareholders to vote in favor of reinstating his $56 billion pay package, following its rejection by a Delaware judge earlier this year.

The judge determined that the board of directors of Tesla failed to sufficiently disclose their personal connections to Musk, while also noting that the company was making significant progress towards achieving the plan's goals, Fox Business reported.

As a result of the absence of these disclosures to shareholders, the judge deemed the compensation plan invalid due to its excessive amount.

Tags

Elon Musk, Tesla, Insider trading