Musk Seeks Dismissal of Tesla Stock-Sale Suit
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Tesla Inc. co-founder Elon Musk urged a Delaware judge to toss an investor lawsuit alleging he improperly sold more than $7.5 billion in shares after receiving inside information that the electric-car maker would miss its production and delivery targets in 2022.
Lawyers for Musk, the world’s richest person, argued in a filing Aug. 4 that the lawsuit by an investor, Michael Perry, was filed improperly in Delaware Chancery Court because Tesla last year moved its state of incorporation to Texas. They also disputed Perry’s claims Tesla directors are beholden to Musk and allowed him to wrongfully benefit from the company’s struggles.
The suit “offers a host of conclusory allegations related to events that occurred years ago, none of which is alleged to have actually harmed the company,” Musk’s attorneys said in a 43-page brief seeking dismissal of the lawsuit.
The filing came the same day Tesla directors disclosed their decision to grant Musk an interim stock award — valued at $30 billion — while a legal fight over his 2018 pay package drags on. They said the award was designed to keep the billionaire’s attention on the automaker, who runs several other companies and has been an active player in U.S. politics.
Lee Squitieri, Perry’s lawyer, didn’t immediately return a call seeking comment.
Perry sued Musk, Tesla’s CEO, in May 2024 claiming directors didn’t properly supervise his sales of stock after he’d learned the company would miss its fourth-quarter targets.
Musk “exploited his position at Tesla” by using the information when selling part of his stake to bolster his buyout of social media platform then-known as Twitter, according to Perry’s complaint. Musk filed suit to renege on his offer to pay $44 billion for the social-media platform, but then dropped his opposition after Twitter seemed poised to win the case in court.
Perry wants Delaware Chancery Judge Kathaleen St. J. McCormick to make Musk return to the company the profit he made on the share sale. McCormick oversaw the Twitter case and ruled against Musk in a series of pre-trial decisions that prompted him to drop challenges to the deal.
Late last year, McCormick also blocked an earlier record-setting pay package for Musk after finding that Tesla directors who signed off on it were conflicted and that the company didn’t properly disclose the terms of the executive compensation plan. Musk is currently appealing that decision.
The case is Perry v. Musk, 2024-0560, Delaware Chancery Court (Wilmington).
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