The lawsuit was filed two days before a crucial vote by Tesla shareholders on whether to reinstate Musk’s $56 billion compensation package after a Delaware judge vacated it in January, finding that Musk had mismanaged the process.
According to the lawsuit filed by the Employees’ Retirement System of Rhode Island (ERSRI), Musk and his brother Kimbal Musk, who is a member of the Tesla board, sold a combined $30 billion worth of stock in the electric car maker between late 2021 and the end of 2022, cashing out before news was made public that led to the stock price falling.
According to the complaint filed in Delaware Chancery Court, Musk sold the stock at an artificially inflated price while concealing plans to use the money to buy social media platform Twitter, which later renamed the company X. The complaint also said Musk sold his Tesla shares after learning deliveries of Tesla’s vehicles were falling far short of expectations.
Musk and Tesla did not respond to messages seeking comment. The Rhode Island State Employees Retirement System holds about 140,000 Tesla shares. Tesla shares closed at $170.66 on Tuesday, valuing its holding at about $24 million. A similar lawsuit filed in the same court late last month by another Tesla shareholder, Michael Perry, also accused Musk of insider trading when he sold $7.5 billion worth of Tesla shares in late 2022. Musk is currently under investigation by regulators looking into whether he violated federal securities laws when he bought Twitter shares in 2022.
The lawsuit filed by ERSRI on Tuesday also alleges that Musk engaged in multiple dishonest acts against Tesla, including transferring Tesla employees to X and having Tesla pay for advertising on Twitter after it acquired the company.
ERSRI’s financial director said in a statement that he was concerned that Tesla’s board was not doing enough to monitor Musk’s conflicts of interest.
