Democratic Senator Elizabeth Warren has called on the Securities and Exchange Commission (SEC) to investigate Tesla and its board of directors for potential violations of securities laws following CEO Elon Musk’s assumption of control over Twitter last year.
In a nine-page letter sent to the SEC on Monday, Warren expressed concerns about conflicts of interest, misappropriation of corporate assets, and negative impacts on Tesla shareholders arising from Musk’s extensive list of responsibilities, including his ownership of Twitter while remaining the CEO of Tesla.
The senator further criticized Tesla’s board for failing to ensure actions in the best interests of shareholders.
Warren’s letter highlighted several key concerns, including the allocation of Tesla resources towards Musk’s Twitter takeover, potential conflicts of interest related to advertising from other car companies, and possible labor law violations during the transition of Tesla employees to Twitter.
She has requested SEC chair Gary Gensler to conduct a thorough review. While Linda Yaccarino took over as Twitter’s new CEO last month, Musk has retained significant control over the platform.
The increasing worry among investors and lawmakers regarding Musk’s turbulent control of Twitter, which he acquired for $44 billion, has spilled over into his management of one of the most influential electric car companies in the US.
Oppenheimer & Co. downgraded Tesla’s rating due to risks associated with Musk’s ownership and management of Twitter in 2022. Tech investor Cathie Wood revealed that she wrote down her Twitter stake by 47% in an interview with the Wall Street Journal on Friday.
Warren highlighted the conflict of interest arising from Tesla’s direct competitors, such as Audi and GM, advertising on Twitter while the platform seeks to secure funding.
In April, a group of 17 major Tesla investors penned an open letter to the company’s board expressing concerns about Musk’s inability to focus on running the company.
Tesla, as a publicly owned company, has responsibilities to its shareholders and the public. Warren emphasized that Musk’s personal wealth and his relationships with board members should not exempt him or the Tesla board from adhering to basic SEC governance and disclosure rules.
The senator argued that Tesla’s board failed to hold Musk accountable. While Twitter’s board composition allows for more independence, Tesla’s board, consisting of eight members, including Musk, his brother, a former Tesla executive, and two close friends, may lack true independence.
Warren previously raised concerns about Musk and Tesla’s board in December, noting that Tesla shareholders might be adversely affected by Musk’s ownership of Twitter in a letter to company chair Robyn Denholm.
CNN has reached out to Tesla for comment, but no response has been received at the time of writing.