Elizabeth Warren calls on SEC to investigate Tesla, Elon Musk over governance issues once again

Sen.
Elizabeth
Warren,
D-Mass., once
again
urged
the
U.S.
Securities
and
Exchange
Commission
to
investigate
Tesla,
CEO
Elon
Musk
and
the
company’s
board
of
directors
over
what
she
called,
“possible
misappropriation
of
Tesla
resources
and
conflicts
of
interest
arising
from
Mr.
Musk’s
dual
role
at
Tesla
and
X—
renamed
from
Twitter.”

Warren,
who
sits
on
both
the
Senate’s
banking
and
the
armed
services
committees,
had

sent
a
similar
request
to
the
SEC
last
July,
and

a
letter
to
Tesla’s
board
chair
Robyn
Denholm
expressing
similar
concerns
in
the
past.

In
a

six-page
letter
dated
March
21,
Warren
flagged
new
worries
to
the
federal
agency,
writing
that
recent
evidence
suggests,
“Tesla’s
Board
lacks independence
from
Mr.
Musk,
who
uses
his
control
over
the
Board
for
his
personal
benefits, rather
than
in
the
best
interest
of
Tesla’s
shareholders.”

Warren’s
letter
refers
to
a
Delaware
Chancery
court
ruling
in
January
this
year
in
which
the
judge,
Kathaleen
McCormick,
found
that
Elon
Musk
controlled
Tesla
and
its
board
had
“breached
their
fiduciary
duties
when
awarding
Musk
an
‘unfathomable’
equity
compensation
plan
worth
$55.8
billion.”

Tesla’s
share
price
has
declined
around
30%
year
to
date,
Warren
noted.

“Mr.
Musk’s
recent
public
statements
and
actions
have
raised
fresh
concerns
about
conflicts
of
interest,
the
redirection
of
Tesla’s
resources
to
Mr.
Musk’s
private
companies,”
she
wrote,
referring
to
Musk’s

demand
for
25%
of
voting
power
over
Tesla,
his
wish
to
move
Tesla’s
incorporation
site
to
Texas,
and
his
threat
to
develop
artificial
intelligence
products
elsewhere
if
he
doesn’t
get
that
control,
among
other
things.

Tesla’s
investor
relations
VP
Martin
Viecha
and
VP
of
Public
Policy
and
Business
Development,
Rohan
Patel,
did
not
respond
to
requests
for
comment.
Tesla
does
not
maintain
a
traditional
public
relations
team
in
North
America.

Musk,
who
is
CEO
of
Tesla
and
defense
contractor
SpaceX,
as
well
as
chief
technology
officer
and
owner
of
X,
and
founder
of
xAI,
Neuralink
and
The
Boring
Co.,
posted
a
comment
about
Warren
to
his
social
media
platform
in
response
to
the
senator’s
letter.

Musk
said:
“Senator
Karen’s
main
economic
&
tax
advisor
is
SBF’s
Dad.
I
suspect
some
of
this
is
coming
from
him.”
Musk
has
called
Warren
“Senator
Karen”
in
previous
posts.

Musk
was
alluding
to
Sam
Bankman-Fried,
or
SBF,
who
was
convicted
in
2023
of
seven
criminal
counts
against
him
in
relation
to
the
2022
collapse
of
his
crypto
company
FTX
and
sister
hedge
fund
Alameda
Research.

SBF’s
father,
Stanford
legal
scholar
Joseph
Bankman,
signed
a
letter
in
support
of
her
2016
proposed
legislation
aimed
at
simplifying
the
U.S.
tax
code
and
reportedly
advised
her
on
the
legislation.

A
spokesperson
for
Warren’s
office
confirmed
that
Bankman
had
no
involvement.

A
spokesperson
for
the
SEC
told
CNBC
via
e-mail
on
Thursday
that
the
agency’s
Chair
Gary
Gensler
“will
respond
to
Members
of
Congress
directly,”
rather
than
via
public
or
press
statements.

Musk
and
the
SEC
have
already
clashed
repeatedly
through
the
years.
The
federal
financial
regulators
charged
Musk
with civil
securities
fraud after
he
tweeted
in
2018
that
he
was
exploring
a
take-private
deal
for
Tesla
at
$420
per
share
and
had
“funding
secured”
to
do
so.
Musk’s
tweets
caused
a
halt
in
trading
of
Tesla
shares
and
sent
the
company’s
share
price
seesawing
for
weeks.

The
SEC
is
now
investigating
whether
Musk,
or
anyone
else,
committed
securities
fraud
in
2022
as
he
began
buying
up
stock
in
Twitter
ahead
of
his
leveraged
buyout
of
the
company. Musk
was
late
to
file
a
required
disclosure
about
his
initial
investment
in
Twitter,
before
he
took
the
company
private
and
rebranded
it
as
X
Corp.

Another
probe
of
Tesla
and
Musk
would
add
to
the
tensions
between
the
agency
and
one
of
the
world’s
richest
people
on
paper.

On
Thursday,
Tesla
shares
closed
down
by
a
point
for
the
day
at
$172.82,
but
were
ticking
slightly
higher
after
hours.

Read


Sen.

Warren’s
full
letter

to
the
SEC.