New York CNN
After CEO Elon Musk seized control of Twitter last year, Democratic Senator Elizabeth Warren requested that the SEC investigate Tesla and its Board of Directors to determine if they had violated securities law.
In a letter of nine pages to the Securities and Exchange Commission, Monday, Senator Warren of Massachusetts said that Elon Musk's extensive list of responsibilities - from being the owner of Twitter to remaining Tesla CEO - 'has raised concerns about conflict of interest, misappropriation corporate assets, and negative impacts for Tesla shareholders. Warren also said that the board of Tesla's electric car company failed to act in shareholders' interests.
Warren's letter cites several concerns, including the use of Tesla (TSLA), conflicts of interest with advertising by other car companies and possible violations of labor laws when some Tesla (TSLA), employees are transferred to Twitter.
Warren has asked Gary Gensler, the SEC's chair, to oversee this review. Musk retains significant control of Twitter, even though former NBCUniversal executive Linda Yaccarino became the new CEO last month.
Investors and legislators have become increasingly worried about Musk's chaotic management of Twitter, the company he purchased for $44 billion. Warren wrote that this disorder has spread to Musk's management at one of the United States' most influential electric cars companies. Oppenheimer & Co. lowered its rating solely due to the risks posed in 2022 by the billionaire's ownership of Twitter and his management. Cathie wood, a tech investor who spoke to the Wall Street Journal on Friday, said that she had written down her stake in Twitter by 47%.
Warren said Twitter relies heavily on advertising by Tesla's competitors such as Audi(AUDVF) or GM (GM), causing a conflict as the platform tries to raise funds.
In April, a group of 17 Tesla investors sent an open letter to its board in which they complained that Musk was too distracted to manage the company.
Musk's wealth and personal relationships with Board Members do not excuse him or the Tesla Board for failing to meet basic SEC governance rules and disclosure requirements.
Warren claims that Tesla's board did not hold its CEO responsible. Tesla, unlike Twitter, is a publicly traded company and therefore must have an independent board to represent the best interests of investors. Warren claims that the board is not truly independent. It includes Musk, his brother and two friends who have known Musk for a long time.
Warren wrote that 'these close relationships could explain the board’s inability or unwillingness for years to address concerns raised by Mr. Musk’s actions.
This is not the first occasion that Warren has criticized Musk and Tesla's Board. In a letter sent to the company's chair Robyn denholm in December last year, Warren wrote that Tesla shareholders could be hurt by its CEO owning Twitter.
In this missive, Warren asked a series questions about the Tesla board's handling of 'conflicts, misappropriation and other actions of Mr. Musk which appear to not be in Tesla's and its shareholders' best interests'.