Tesla Investor Sues Elon Musk and Board Over Erratic Tweets
A Tesla investor sues Elon Musk and the company's board of directors, claiming his unchecked Twitter activity violates an SEC settlement and breaches fiduciary duty.
A Tesla investor sues CEO Elon Musk and the company's board of directors over Musk's continued use of "erratic tweets" that allegedly violate a 2019 settlement with the U.S. Securities and Exchange Commission. The lawsuit, filed by investor Chase Gharrity in Delaware Chancery Court, asserts that Musk exposes Tesla to potential regulatory fines and risks driving down the company's share price through his unfiltered social media activity.
The legal action targets the board for failing to control Musk's behavior and properly oversee his public statements. Under the terms of the 2019 SEC agreement, Musk possesses the freedom to tweet about most topics, but he requires pre-approval from a securities lawyer whenever he discusses specific company events or financial milestones. This settlement originally stems from a 2018 scandal where Musk falsely claimed he had "funding secured" to take Tesla private at $420 per share.
This latest 105-page complaint cites several specific tweets as evidence that Musk ignores the agreed-upon oversight rules, including a May 2020 post stating that "Tesla stock is too high IMO." By allowing this behavior to continue, the lawsuit argues that both Musk and the board betray their fiduciary duties to protect the company and its shareholders from unnecessary legal and financial harm.