Tesla faces lawsuit from investor over CEO Elon Musk's tweets on 10% stock sales

Electric vehicle manufacturer, Tesla Inc. on Thursday was slapped with litigation by investor David Wagner over CEO Elon Musk's tweets on a 10% stock sale. According to Bloomberg Law, the lawsuit was filed in the Delaware Court of Chancery. As per the litigation, Wagner called for a probe into whether Musk's careless Twitter posts violate the 2019 agreement, which requires the latter's social media communication to be pre-approved by a securities lawyer.

Meanwhile, Tesla's record-high stocks dropped by about a quarter after Musk's tweet on November 6, asking for votes in favour or against of his idea to sell 10% of his stake. Notably, following mostly positive answers from his viewers, Musk has sold nearly 12.9 million shares worth $14 billion (roughly Rs. 1,06,800 crores) so far. Wagner's lawsuit also expressed concern over the impact of Musk's stock-related tweet on the company's share value. "It is unclear who at Tesla, if anyone is currently reviewing Musk's tweets," in the absence of a general counsel, who is responsible to oversee what the CEO posts online, the suit said, as per Bloomberg Law.

"Musk remains undeterred and continues to post on Twitter and social media on matters that are material to Tesla and stockholders, and which ultimately have an impact on Tesla stock prices," Wagner said in his suit, as quoted by Bloomberg.

The suit also appeals for a look into Musk's derogatory remarks on Massachusetts' Democrat Senator Elizabeth Warren. The feud between the eminent personalities took place after Senator Warren criticised Musk's tax-paying habits. To which Musk had replied through a Twitter post, saying "You remind me of when I was a kid and my friend's angry mum would just randomly yelled everyone for no reason."

However, the lawsuit does not list Musk as a defendant, as per Bloomberg. Instead, it seeks "credible" documents which ensure that Tesla, among other things, "is not mismanaged." It is also pertinent to mention that Tesla's most recent general counsel Alan Prescott resigned his post last April.

Tesla stocks tumbled by 22% since Musk's stock selling spree

As per the Bloomberg report, Musk's comments prior to the poll also suggested that the business tycoon was planning to sell a major chunk of his holdings to cover tax obligations, expiring in August next year. However, as soon as the world's richest man began selling his shares, Tesla's stocks dipped by 22% since November 8. So far they are down by 14% in the last month.

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