WILMINGTON: Elon Musk made billions of dollars by selling Tesla stock using insider information, an institutional shareholder accused in a lawsuit filed on Tuesday, asking the court to direct the Tesla CEO to return “unlawful profits.”

The lawsuit comes two days before a critical vote by Tesla shareholders on whether to reinstate Musk’s $56 billion pay package after a Delaware judge voided it in January because she found that Musk had improperly controlled the process.

Musk and his brother Kimbal Musk, a Tesla director, sold a combined $30bn in the electric vehicle maker’s stock between late 2021 and the end of 2022, cashing in before news that would cause the stock to fall became public, according to the lawsuit, which was 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 social media platform Twitter, which he later renamed X, according to the lawsuit, filed at the Delaware Chancery Court.

Musk also sold Tesla stock when he knew that deliveries of Tesla cars had fallen far below public projections, the lawsuit said.

The Employees’ Retirement System of Rhode Island holds about 140,000 shares of Tesla. Tesla’s stock closed at $170.66 on Tuesday, valuing the stake at about $24 million.

A similar suit filed at the same court late last month by Michael Perry, another Tesla shareholder, accused Musk of insider trading when he sold over $7.5 billion of shares in Tesla in late 2022.

Published in Dawn, June 13th, 2024