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Elizabeth Warren Requests SEC Investigation Into Musk Regarding 'Conflicts Of Interest,' 'Misappropriation Of Corporate Assets'

'The Board's Inaction And Inadequate Disclosures, And The Close Relationships Of Several Board Members To Mr. Musk, Raise Questions'

Published: July 18, 2023
  |   By Christopher Bertman

Massachusetts Senator Elizabeth Warren penned a letter requestiong the Securities and Exchange Commission investigate Elon Musk for allegedly misappropriating assets and conflicts of interest regarding his ownership of Tesla and Twitter.

“I am writing to request an investigation into Tesla, INC., and the company’s U.S. Securities and Exchange Commission (SEC) disclosures regarding the actions of it’s Board of Directors (the “Board”) in managing the apparent conflicts of its Chief Executive Officer, Elon Musk,” Warren’s letter to SEC chair Gary Gensler reads, claiming conflicts of interest regarding alleged “misappropriation of corporate assets” along with other “negative impacts” to Tesla shareholders on behalf of Musk.

“Despite recent and repeated calls from investigators to address these actions, the Board appears to have failed to uphold its legal duty to ensure that Mr. Musk act in the best interest of Tesla,” the letter continues. “The Board also does not appear to have adequately disclosed concerns about these issues to investors, undermining shareholders’ ability to make informed voting and investing decisions and to hold their fiduciaries accountable.”

“The Board’s inaction and inadequate disclosures, and the close relationships of several Board members to Mr. Musk, raise questions about the effectiveness of their corporate governance and potential violations of securities laws.”

The letter further detailed Musk’s appointment of Linda Yaccarino as Twitter’s CEO earlier this year, claiming her appointment “does little to address the concerns to Tesla and its shareholders” regarding Musk’s continued role within Twitter.

“Despite hiring Ms. Yaccarino, he is likely to retain ‘significant control’ over the company and intends to continue overseeing core functions of the business,” the letter concludes. “Given the concerns about the actions by Mr. Musk and the Board, I ask that the SEC conduct a review to determine if they have complied with relevant securities laws.”

One Twitter user criticized Warren’s letter by saying it was “odd” the Massachusetts senator didn’t see conflicts of interest with Musk’s other companies including SpaceX, the Boring Company, and Neuralink.

“It’s only when Elon fights for free speech that she sees a problem.”

“Exactly,” Musk responded.

The letter reiterates Warren’s previous concerns expressed in December 2022 following Musk’s acquisition of the company in October.

″[E]very Board of Directors of a company with multiple shareholders – especially publicly traded companies – is responsible for ensuring that a controlling shareholder (especially one who is also a Chief Executive Officer, or CEO) does not treat the company as a private plaything,” Warren wrote at the time. “This use of Tesla employees raises obvious questions about whether Mr. Musk is appropriating resources from a publicly traded firm, Tesla, to benefit his own private company, Twitter.”

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