Tesla is the subject of a new trial by institutional investors questioning whether the leader’s Tweets are under review. Several Tweets focused on the lawsuit, including one, sent on November 6, which questioned Musk’s more than 66 million subscribers if he should sell 10% of his Tesla shares. Additionally, Musk’s recent feud with Massachusetts Democrat Elizabeth Warren also contributed to the lawsuit.
Musk is not officially listed as a defendant in the lawsuit.
Filed in Delaware Chancery Court, the lawsuit accuses Musk of tweeting in a way that could affect the value of Tesla stock. According to Bloomberg Law, who uncovered the lawsuit, the plaintiff wonders whether Musk’s Tweets are under review under a 2019 settlement with the SEC, which required Tesla to “establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications. “
“It’s unclear who at Tesla, if any, is currently reviewing Musk’s tweets,” the lawsuit says. “Musk doesn’t let this discourage him and continues to post on Twitter and social media topics that are important to Tesla and its shareholders, and which ultimately have an impact on Tesla’s stock price.”
Tesla currently does not have a General Counsel in its legal department, who is likely the person who would be required to review Musk’s Tweets before they are sent. In December 2019, Johnathan Chang left the company and was its last full-time general counsel. The company assigned Lynn Miller to the post shortly after, but she left Tesla in June for self-driving trucking startup Plus.
Musk’s Nov 6 poll was sent after days of speculation that the billionaire CEO, whose net worth has skyrocketed in the past two years thanks to Tesla shares, would pay capital gains taxes . Technically, capital gains tax is a levy on the profit from an investment that is only incurred when the investment is sold. Since Musk had not sold any of his stakes, he would technically not be required to pay any tax on his unrealized gains resulting from the increase in Tesla’s share price.
I will respect the results of this poll, whatever the meaning
– Elon Musk (@elonmusk) November 6, 2021
However, Musk was prepared to sell 10% of his holdings and will pay a $ 15 billion tax bill based on options that expire in August 2022. Tesla said in a 10-Q filing earlier this year:
“If the price of our common stock were to drop significantly, Mr. Musk could be forced by one or more banking institutions to sell Tesla common stock to meet his loan obligations if he was unable to do so by others. means. Such sales could cause the price of our common shares to fall further. “
Musk will have to pay income tax on the options because he has to exercise them due to their expiration date. They are taxed as a benefit or as remuneration for staff, depending on CNBC, and he will pay a combined federal and state tax rate of 54.1%, or about $ 15 billion, because his options earnings will be just under $ 28 billion.
The lawsuit also highlights a recent Twitter feud with Senator Elizabeth Warren, which has been a popular topic this week. Warren called Musk a ‘picnic’ earlier this week, resulting in a host of challenges from Musk, who reminded Warren of her massive tax bill and shared a 2019 post that called her of “fraud” for pretending to be Native American.
The complaint demands that shareholders receive internal Tesla files for inspection. Under Delaware law, shareholders of a state-owned company who “have a credible suspicion of corporate wrongdoing” have the right to inspect these documents.
The case is Wagner v. Tesla Inc., Del. Ch., N ° 2021-1090. The complaint was filed on December 16.
Disclosure: Joey Klender is a shareholder of TSLA.
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