Sen. Warren asks the SEC to investigate Tesla over possible Twitter conflict of interest
Elon Musk.
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Sen. Elizabeth Warren has called on the Securities and Exchange Commission to investigate Tesla.
She cites conflicts of interest related to CEO Elon Musk’s dual roles in Tesla and Twitter.
Tesla’s board may also have limited independence from Musk, possibly amounting to a legal violation.
Sen. Elizabeth Warren wants the Securities and Exchange Commission to investigate Tesla and its board over conflicts of interest and for negatively impacting shareholders by failing to act independently from CEO Elon Musk.
The Democratic lawmaker took aim at Musk’s split leadership of Tesla and Twitter, arguing that this has led to conflicts of interests and misappropriation of corporate assets.
“Despite recent and repeated calls from investors to address these actions, the Board appears to have failed to uphold its legal duty to ensure that Mr. Musk act in the best interest of Tesla,” she wrote, addressing the letter to SEC Chair Gary Gensler.
Further, Warren noted the board’s possible lack of independence from Musk, citing close relationships between the CEO and several board members.
Together with the fact that the board failed to disclose their concerns over Musk’s dual roles with Tesla shareholders, this could constitute a violation of securities law, she wrote.
Warren’s letter is an extension of long-standing frustration among Tesla investors, who have lamented Musk’s takeover of Twitter as a serious distraction from his obligations to the electric vehicle maker.
In April, 17 major stakeholders in Tesla shared an open letter to the firm’s board, citing similar grievances, which they said jeopardized the company’s value. Meanwhile, Warren previously warned the board in December that Musk must not treat Tesla as a “private plaything.”
Warren reiterated these concerns in the lastest letter to the SEC. They include Musk’s transfer of Tesla employees to help with Twitter — a potentially involuntary move — and his ability to use the platform to boost Tesla’s advertising ahead of other car manufacturers.
Tesla’s investors also saw Musk’s desire for Twitter as directly detrimental to the carmaker’s stock, citing that Tesla lost $582.4 billion in market capitalization a year after Musk disclosed his initial stake in the social media company.
After complaints arose from shareholders, Musk hired Linda Yaccarino, formerly head of advertising at Comcast’s NBCUniversal, to take over as CEO of Twitter. However, Warren notes that this is not enough, as Musk “is likely to retain ‘significant control’ over the company and intends to continue overseeing core functions of the business.”
Moreover, she points out that there is nothing to stop Musk from firing Yaccarino.
Neither Tesla nor the SEC responded immediately to a request for comment. Twitter automatically responded with the poop emoji, in accordance to a policy implemented under Musk.
