After Elon Musk allegedly made billions of dollars selling Tesla (NASDAQ:TSLA) shares using insider information, the company's shareholders filed a petition asking the court to order the Tesla CEO to restore the "illegal income."

Two days before a key vote by Tesla shareholders on whether to reinstate Musk's $56 billion compensation plan, a Delaware judge cancelled Musk's $56 billion compensation plan in January after finding that Musk illegally controlled the process.

According to a lawsuit filed by the Employees Retirement System of Rhode Island (ERSRI), Musk and his brother, Tesla director Kimbal Musk, sold a total of $30 billion of Tesla's stock between the end of 2021 and the end of 2022 and cashed out before the news of the stock's decline became public. According to a lawsuit filed in the Delaware Court of Chancery, Musk sold the stock at fraudulently inflated prices while concealing his plan to use the profits to buy social media company Twitter (later X).

Musk and Tesla did not respond to requests for comment.

ERSRI is understood to hold about 140,000 shares of Tesla stock, which closed at $170.66 on Tuesday (11 June), with holdings worth almost $24 million.

Late last month, another Tesla shareholder, Michael Perry, filed a second lawsuit in the same court accusing Musk of insider trading in the sale of more than $7.5bn of Tesla stock at the end of 2022.

Musk is currently under regulatory investigation into whether he violated federal securities laws when he purchased Twitter stock in 2022.

ERSRI's lawsuit also alleges that Musk has been disloyal to Tesla on several occasions, including sending Tesla employees to work at Company X and forcing Tesla to start paying for ads on Twitter after acquiring the platform. ERSRI's general treasurer has expressed concern that Tesla's board of directors isn't doing enough to monitor Musk's conflicts of interest.

The lawsuit also alleges that Musk assisted xAI, of which he is CEO, in hiring Tesla employees and transferring artificial intelligence (AI) semiconductors originally intended for Tesla to the X Information Platform and xAI.

Last week, news of the AI chip exports fuelled concerns that Musk was prioritising AI development outside of Tesla. In an article on X, Musk said that Tesla lacks a place to store and activate applications for NVIDIA's (NASDAQ:NVDA) AI chips.