Tech and electric car company Tesla is being sued over alleged violation of agreement with the US Securities and Commission Exchange, and lack of adherence of board member to fiduciary duties after a tweet on selling stocks by CEO Elon Musk pulled down the company's stock prices. The suit was filed by Tesla investor David Wagner who called for access to internal documents to investigate whether Tesla and Musk violated an agreement with the US securities regulator.
The controversial tweet on November 6 saw Musk asking his Twitter followers whether he should sell 10% of his shares in the company. Telsa shares tumbled 7.3% after the move, it's steepest fall in recent months.
Elon Musk is known for using Twitter to drive up interest in Tesla projects and stocks, but his tweets have been censured by shareholders and the US Securities and Regulatory Commission which once fined hin $40 million, and forced him to renounce bis Tesla chairmanship, while ordering him to run tweets by Tesla's lawyers.
In May 2020, Musk tweeted that "Tesla's stock price is too high imo." That day Tesla's stock price closed 10 percent lower than the day before. The SEC said the tweet was subject to review since it addressed the company's financial condition. Tesla said it wasn't since it was a "personal opinion."
As of Thursday, the billionaire had sold a whopping 934,091 shares for $884.1 million on Thursday to pay for taxes on the exercise of stock options to buy 2.2 million shares in Tesla, according to U.S. securities filings according to Reuters. He owned a combination of about 244 million shares through his trust and stock options, bringing his stake in Tesla to about 23% as of June 30. It included 170 million shares held by his trust.