Tesla is facing an investor lawsuit over Elon Musk’s tweets on 10% stock sales and his
- Tesla has been hit with an investor lawsuit over Elon Musk’s tweets about the company’s stock.
- The lawsuit was filed by David Wagner in the Delaware Court of Chancery, according to Bloomberg Law.
- Tesla’s shares have tumbled 22% since Musk began his stock-selling spree on November 8.
The lawsuit was filed by investor David Wagner in the Delaware Court of Chancery on Thursday, according to Bloomberg Law.
His litigation, according to Bloomberg’s report, called for an investigation into whether Musk continues to tweet carelessly in violation of a 2019 agreement, which requires any of his communication about Tesla over social media to be pre-approved by a securities lawyer.
It also expressed concern over the impact of his tweets on Tesla’s stock.
“It is unclear who at Tesla, if anyone, is currently reviewing Musk’s tweets” after the company’s last top general counsel departed in December and the most recent acting incumbent, Alan Prescott, left in April, the suit said.
Tesla doesn’t currently have a legal counsel, who is likely the relevant person responsible for overseeing Musk’s tweets.
Musk asked Twitter on November 6 to decide whether he should sell 10% of his stock. After an overwhelming “yes” response, Musk has sold 12.9 million shares worth nearly $14 billion of Tesla shares as of December 18. To hit the 10% mark, he would have to sell another 4.1 million shares.
But even prior to the poll, Musk’s comments suggested he was already planning to sell large chunks of stock to cover tax obligations for exercising options that expire in August next year.
Tesla stock has tumbled 22% since Musk began selling his share-selling spree on November 8. The company’s shares are down 14% in the past month.
“Musk remains undeterred and continues to post on Twitter and social media on matters that are material to Tesla and its stockholders, and which ultimately have an impact on Tesla’s stock prices,” the shareholder added.
The suit also takes aim at Musk’s recent “Twitter feud with Sen. Elizabeth Warren.” The billionaire hurled insults at the Massachusetts Democrat this week when she criticized his tax-paying habits.
“You remind me of when I was a kid and my friend’s angry Mom would just randomly yell at everyone for no reason,” Musk tweeted.
The Wagner v. Tesla Inc lawsuit doesn’t formally list Musk as a defendant, according to Bloomberg.
It seeks access to internal documents from Tesla under a law providing shareholders who suspect corporate wrongdoing with broad inspection rights. There is “a credible basis to believe that Tesla is, among other things, being mismanaged,” the suit said.
Tesla didn’t immediately respond to Insider’s request for comment.