Daily Management Review

Lawsuit Against Tesla And Musk Filed By Investor Over Musk’s Tweets On Selling Of His Stocks


Lawsuit Against Tesla And Musk Filed By Investor Over Musk’s Tweets On Selling Of His Stocks
Tesla investor David Wagner filed a lawsuit against eth US electric car maker Tesla Inc objecting to social media posts, including his poll posts on Twitter, made by Tesla CEO Elon Musk about whether he should be selling his stocks in the company. The law suit alleges that these social media posts actually pulled down the price of the company’s stocks.
In the lawsuit, Wagner requested the courts to call for internal documents of the company for investigating whether both Tesla and Musk had breached an agreement that the two parties had entered into with the US securities regulator and alleged that the board members of the company had been unable to adhere to their fiduciary duties.
The US Securities and Exchange Commission had filed a case in 2018 against Musk over some tweets the billionaire had made about taking Tesla private. Musk had later settled the case with the SEC following an agreement with the regulator in which Musk would allow the lawyers of the company approving any tweets he posted on social media that pertained to material information about the company.
On Nov. 6 this year, Musk had tweeted that he would be selling off 10 per cent of his stocks in Tesla if his followers on the social media platform also agreed. That tweet resulted in the stocks of the company plunging by about a quarter from around record highs prior ot the tweets. Later Musk informed that he had sold almost $14 billion worth of shares so far.
In the lawsuit, which was filed with the Delaware Court of Chancery on Thursday, the plaintiffs requested the court to call for records and books form the company linked to Musk’s tweets, including those documents that would aid in identifying whether the stock sales tweets were reviewed or pre-approved in advance.
Musk and the board of the company had been previously sued by another investor of the company in March this year in which the plaintiff alleged that Musk had breached the 2018 settlement he had made with the SEC and he had exposed the company’s shareholders to losses billions of dollars.