A legal suit has been instituted against the CEO of Tesla, Elon Musk for his initiative to birth an artificial intelligence (AI) company called xAI.
The lawsuit which also includes members of Tesla’s board of directors was filled by the companies shareholders arguing that xAI is a competing company that would draw resources and talent from Tesla.
This is coming after Musk said he was going to develop AI separate from the automobile company if he is not given more voting power over the company.
Building another AI company “xAI” is seen by the shareholders as creating a conflict of interest since Musk had earlier said that Tesla was an AI company, raising it’s stock value so high.
Filled on yesterday, the lawsuit was instituted by Cleveland Bakers and Teamsters Pension Fund in Delaware Chancery Court, Daniel Hazen and Michael Giampietro on behalf of Tesla itself. In it, they allege that Musk and members of Tesla’s board breached fiduciary duties to shareholders and unjustly enriched Musk by allowing the CEO to launch a competing company, TechCrunch reports.
Begging the court to disgorge Musk stake in xAI and relinquish it to Tesla the plaintiffs said the Tesla CEO violated the automobiles business ethics and code with the creation of xAI under the watch of the board members.
According to the complaint “The notion that the CEO of a major, publicly traded Delaware corporation could — with the evident approval of his board — start a competing company, and then divert talent and resources from his corporation to the startup, is preposterous.”
