Sen. Elizabeth Warren, Democrat of Massachusetts, 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 “potential 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 the Senate Banking and Armed Services committees, sent a similar request to the Securities and Exchange Commission last July, and a letter to Tesla Chairman Robin Denholm expressing similar concerns in the past.
In a six-page letter dated March 21, Warren informed the federal agency of new concerns, writing that recent evidence suggests that “Tesla’s Board of Directors lacks independence from Mr. Musk, who uses his control of the Board for his own personal interests, rather than in the interests of Tesla shareholders.”
Warren's letter references a Delaware Chancery Court ruling in January of this year, in which the judge, Kathleen McCormick, found that Elon Musk controlled Tesla and that its board “violated their fiduciary duties when they awarded Musk an 'unfathomable' $55.8 billion stock compensation plan.” dollar. “
Warren pointed out that Tesla's stock price has fallen by about 30% since the beginning of the year so far.
“Mr. Musk’s recent public statements and actions have raised new concerns about conflicts of interest and the redirection of Tesla’s resources to Mr. Musk’s private companies,” she wrote, referring to Musk’s request for, and desire for, 25% voting power over Tesla. Moving Tesla's founding location to Texas, and threatening to develop AI products elsewhere if he didn't get that control, among other things.
Tesla's vice president of investor relations, Martin Vicha, and vice president 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 CTO and owner of X, and founder of xAI, Neuralink and The Boring Co, posted a comment about Warren on his social media platform in response to the senator's remarks. letter.
“Senator Karen's chief economic and tax advisor is the father of SBF. I suspect some of this comes from him,” Musk said. 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 charges against him in connection with the 2022 collapse of his cryptocurrency company FTX and sister hedge fund Alameda Research.
SBF's father, Stanford legal scholar Joseph Bankman, signed a letter in support of her proposed 2016 legislation aimed at simplifying the US tax code, and is said to have advised her on the legislation.
A spokesman for Warren's office confirmed that Bankman had no role.
An SEC spokesperson told CNBC via email on Thursday that agency head Gary Gensler “will respond to members of Congress directly,” and not via public or press statements.
Musk and the SEC have already clashed frequently over the years. Federal financial regulators charged Musk with civil securities fraud after he tweeted in 2018 that he was exploring a private deal for Tesla at $420 per share and had “secured financing” to do so. Musk's tweets caused Tesla stock to halt trading and sent the company's stock price to fluctuate for weeks.
The SEC is now investigating whether Musk, or anyone else, committed securities fraud in 2022 when he began buying shares in Twitter before his leveraged takeover of the company. Musk was late in providing the required disclosure about his initial investment in Twitter. Before he took the company private and renamed it X Corp.
Another investigation between Tesla and Musk would increase tensions between the agency and one of the world's richest people on paper.
On Thursday, Tesla shares closed down 1 point on the day at $172.82, but rose slightly after hours.
Read Senator Warren's full letter to the Securities and Exchange Commission.
