Tesla stock price has more than doubled since the beginning of the year. Now, US Senator Elizabeth Warren has stepped in and asked the SEC to investigate whether Tesla and its board violated securities laws after CEO Elon Musk took over Twitter last year.
• Twitter takeover brings Elon Musk new trouble
• Elizabeth Warren criticizes Musk and Tesla board
• SEC to investigate possible violations of securities laws
Elon Musk is repeatedly criticized for getting bogged down. In 2022, Tesla shareholder Richard J. Tornetta sued the Tesla boss for what he believed to be far too high a salary. Tornetta’s lawyers argued that Elon Musk was essentially just a “part-time CEO” at Tesla, working only Tuesdays, Wednesdays and Fridays for the electric car pioneer, while on Mondays and Fridays he worked for the space company SpaceX, which he also heads.
However, Tornetta is far from alone in his anger – especially after Musk also acquired Twitter for $44 billion last year and then served as its CEO for months. In April 2023, for example, a group of 17 major Tesla investors sent an open letter to the company’s board, complaining that Musk was too distracted to run the company. Although the billionaire then appointed a new Twitter CEO, Linda Yaccarino, in May 2023, he continues to exercise significant control over the short message service.
Numerous concerns about Twitter takeover
Now the critics who accuse Musk of neglecting Tesla seem to have received political support. In a nine-page letter to the SEC, Democratic Senator Elizabeth Warren asked for an investigation because Elon Musk’s long list of responsibilities raised “concerns about potential conflicts of interest, misappropriation of company assets, and other negative effects on Tesla shareholders,” according to CNN.
Warren raised concerns that Tesla resources may have gone into Musk’s takeover of Twitter. The question is whether the native South African embezzled Tesla’s human resources by using them on Twitter. She fears that withdrawing resources from Tesla has harmed the electric car maker. In addition, the SEC should investigate whether there were labor law violations when some Tesla employees switched to Twitter.
Warren also raised the issue of a potential conflict of interest in connection with advertising from other automakers. She pointed out that Twitter also relies on advertising from direct Tesla competitors such as AUDI and GM.
Elizabeth Warren criticizes Tesla board
But Elizabeth Warren’s criticism is not only directed at Elon Musk, but also at the Tesla board. In her view, this did not ensure that Musk acted in the best interests of the shareholders. “Tesla is a public company, and Mr. Musk and the Board have responsibilities to shareholders and the public in governing the company,” Warren wrote to the SEC.
“Mr. Musk’s personal wealth and personal relationships with board members do not protect him and the Tesla board from meeting basic SEC governance and disclosure requirements,” the senator said. But this is exactly where she sees a problem, because the Tesla board may not be really independent because the eight-member board includes Elon Musk himself, his brother, a former Tesla manager and two of Musk’s longtime friends, Warren criticizes. “These close ties may account for the Board’s continued inability or unwillingness to address concerns arising from Mr. Musk’s actions,” Warren said.
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