Democratic Senator Elizabeth Warren has called upon the Securities and Exchange Commission (SEC) to investigate Tesla and its board of directors regarding potential violations of securities laws. The focus of the investigation stems from CEO Elon Musk’s takeover of Twitter last year, which has raised concerns about conflicts of interest and misappropriation of corporate assets.
In a nine-page letter to addressed to the chair of the SEC Gary Gensler, Warren highlighted the failure of Tesla’s board to prioritize shareholders’ interests and expressed concerns over the allocation of Tesla’s resources into Musk’s involvement with Twitter, particularly with regards to advertising from competing car companies.
“As the owner of Twitter, Mr. Musk could decide to run the company to maximize badly-needed revenue, even if that includes great deals for Tesla’s competitors and potential injury to Tesla. Alternatively, Mr. Musk could run Twitter to benefit Tesla through favorable algorithms or free advertising,” Warren wrote in the letter.
She argued that such conflicts of interest could compromise Tesla’s position and hinder its ability to secure necessary funds. Warren also raised concerns about labor law violations over the transition of Tesla employees to Twitter potentially raises questions.
“It is unclear whether Tesla employees were invited to work for Twitter or – either implicitly or explicitly – forced to do so and whether their existing employment contracts were respected.”
Warren’s letter, first reported by CNBC, also highlighted the lack of accountability from Tesla’s board in holding Musk responsible for his actions. While Tesla is a publicly owned company, it must maintain an independent board to safeguard investors’ interests. However, Warren pointed out that the composition of Tesla’s board, including Musk himself, his brother, a former executive, and close friends, may compromise its independence and impede objective decision-making.
You can read the full letter below.Letter to SEC asking for investigation into Tesla – FINAL1