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Musk accused of selling $7.5 billion of Tesla stock before releasing disappointing sales data that plunged the share price to two-year low (fortune.com)

submitted 4 months ago by [email protected] to c/news

103 comments fedilink hide all child comments

Elon Musk accused of illegally selling $7.5 billion in Tesla stock in Q4 2022.
Lawsuit alleges Musk and board violated fiduciary duties by selling shares ahead of disappointing vehicle sales data.
Shareholder seeks disgorgement of $3 billion in illegal gains and damages from directors for reckless behavior.

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[–] [email protected] 6 points 4 months ago (1 children)

I believe that normally companies have restricted time windows for trading for people who may have access to information about the company.

kagis

https://corpgov.law.harvard.edu/2021/06/02/determinants-of-insider-trading-windows/

At most publicly traded firms, an insider trading policy (ITP) establishes a pre-specified open trading window each quarter when insiders are allowed to trade, which dictates a corresponding “blackout” period in which they are prohibited from doing so. The typical trading window begins 2-3 trading days after the previous quarter’s earnings release and ends approximately 2-3 weeks prior to the end of the next fiscal quarter, resulting in an allowed trading window of about six weeks. These restrictions on insider trading activity potentially provide both protection from legal or regulatory action as well as liquidity and cost of capital benefits (e.g., Fishman and Hagerty, 1992). Although there is substantial variation in the length and timing of these trading windows, little is known about the factors boards consider when determining these constraints. Furthermore, in addition to these pre-specified trading windows and corresponding blackout periods, firms may impose event-specific trading restrictions on insiders (e.g., due to ongoing merger or acquisition negotiations). These “ad hoc blackout windows,” which are undisclosed to the public, are largely unexplored in prior literature.

[–] [email protected] 5 points 4 months ago

Normally, yes. Working in a couple of big corporations, we would be told when we can't trade because of internal announcements. We could potentially be accused of insider trading. Unless this read a timed trade that was already scheduled ahead of time.