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“New tweets not controlled by Musk” could “have serious ramifications for the company’s ability to raise funding” and “drive out the very voices of the company supposed to stand up to it and protect” investors, the complaint says. .
The 105-page derivative lawsuit, released to Delaware Chancery Court on Friday, accuses the electric vehicle manufacturer’s board of failing to get Musk’s behavior under control online, even as he repeatedly violated a 2018 rulebook with the Securities and Exchange Commission.
The deal, which included payments of $ 20 million each from Musk and Tesla, called on the company to adopt new, strict monitoring procedures related to Musk’s social media posts.
After Musk was charged with contempt for violating the terms of the agreement almost immediately in 2019, the new compliance rules were toughened, according to the partially redacted complaint.
But he reportedly “continued to post tweets without the required prior approval,” while Tesla went through in-house lawyers.
Read more: Elon Musk’s Twitter Sitter Mystery Has a Crazy, Crazy Job
Among the examples cited by the shareholder lawsuit is a May 2020 Twitter post in which Musk dipped Tesla shares by suggesting they were overvalued. That tweet alone “destroyed nearly $ 14 billion of Tesla’s market capitalization in a single day,” according to the complaint.
“Musk’s misconduct” and “Tesla’s board of directors’ inability to ensure compliance” have “caused substantial damage” to the company, the lawsuit says.
It was initially deposited under seal on March 8.
Cause of action: Breach of a fiduciary duty.
Relief: Damages, Costs, Fees and Interest.
Reply: Tesla did not immediately respond to a request for comment on Friday.
Lawyers: The plaintiff is represented by Cooch & Taylor PA and Bottini & Bottini Inc.
The case is Gharrity v. Musk, Del. Ch., N ° 2021-0199, complaint unsealed on 03/12/21.
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