An institutional shareholder filed a lawsuit on Tuesday, accusing Elon Musk of using insider information to sell Tesla stocks and earn billions of dollars, and demanding that the court order the Tesla CEO to return the "illegally obtained profits."
The lawsuit comes as Tesla shareholders are set to have a crucial vote in two days to decide whether to reinstate Musk's $56 billion compensation plan. Previously, a Delaware judge ruled in January that Musk had acted improperly in the approval process, rendering the plan invalid.
According to the lawsuit filed by the Employees' Retirement System of Rhode Island (ERSRI), from the end of 2021 to the end of 2022, Musk and his brother, Tesla director Kimbal Musk, sold Tesla stocks worth $30 billion before negative news that caused the stock price to drop was made public.
The lawsuit also alleges that Musk concealed his plan to use the proceeds to acquire the social media platform Twitter (later renamed X), thereby artificially inflating the stock price for his benefit. Additionally, Musk is accused of selling Tesla stocks while knowing that Tesla's car deliveries were far below public expectations.
Musk and Tesla did not respond to requests for comment.
The Employees' Retirement System of Rhode Island holds approximately 140,000 shares of Tesla stock. On Tuesday, Tesla's stock closed at $170.66 per share, valuing that portion of stock at around $24 million.
At the end of last month, another Tesla shareholder, Michael Perry, filed a similar lawsuit in the same court, accusing Musk of insider trading when he sold more than $7.5 billion worth of Tesla stock in late 2022.
