Former Tesla Australia director pleads guilty to insider trading on lithium deal
A former Tesla director has admitted to insider trading after gaining over $30,000 from buying shares of a lithium business 12 days before the company announced a significant contract with Tesla.
A former executive of Tesla’s Australian unit admitted guilty to two occasions of insider trading based on a supply agreement Tesla signed with Piedmont Lithium in 2020. Kurt Schlosser purchased 86,748 shares of U.S.-based Piedmont in September 2020, according to the Australian Securities and Investments Commission (ASIC), after learning the specifics of the five-year spodumene concentrate supply agreement with the company.
The ASIC claimed that once the deal was publicly disclosed and the share price increased, Schlosser sold his Piedmont stocks for a profit of about $28,883. According to the watchdog, Schlosser also disclosed the information to a friend who was most likely to invest in the company.
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Piedmont Lithium announced in September 2020 that it has signed a legally binding five-year contract to provide Tesla with a third of its anticipated 160,000 tonnes per year of spodumene concentrate production, a hard rock ore commodity used to make battery-grade lithium compounds. The company’s share price increased six times following the deal.
The company intended to supply the concentrate for Tesla between July 2022-July 2023 However, due to delays in the approval procedure for its mine facility in North Carolina, it had to postpone delivery to Tesla indefinitely last year. The agreement was primarily seen as a way to reduce volatility in the commodity, whose value had been declining since 2019.
Many automakers directly signed such deals with mining companies. The support of a major automaker like Tesla can assist early-stage mining companies like Piedmont to get funding from lenders and enhance their financial position.
Former Tesla Director has not yet received a punishment and will show up in court on December 16 in Sydney District Court. The maximum punishment for insider trading, according to ASIC, is 15 years behind bars.
Piedmont Lithium has dual listings in the US and Australia. The company changed its principal listing to New York, USA last year and relocated its headquarters from Australia to the USA.
Recently, a power steering issue in the Model X and Model S vehicles sold between 2017-2020 led to the recall of over 1000 Tesla vehicles in Australia. On Wednesday, the Department of Transport released the advisory, warning that the issue might raise the possibility of collisions that cause “serious injury or death to vehicle occupants and other road users.”
The most recent Australian Tesla recall was issued for 1012 Tesla vehicles due to a possibility that their Electronic Power Assist Steering system could lose power and demand “a greater steering effort from the driver,”, especially at low speeds. There have been two Tesla recalls in Australia in the past two weeks. In the prior recall, 326 Model 3 cars had a seatbelt problem.
Recently, U.S. Senator Ed Markey reportedly warned Elon Musk to fix his companies “or Congress will,” while the U.S. Federal Trade Commission said it was closely monitoring recent events at Twitter “with deep worry.”
I am a law graduate from NLU Lucknow. I have a flair for creative writing and hence in my free time work as a freelance content writer.
