US Senator Elizabeth Warren Urges SEC to Investigate Tesla's 'Conflicts of Interest'

Quincy Jon, Tech Times 18 July 2023, 01:07 pm

Senator Elizabeth Warren of the Democratic Party has urged the US Securities and Exchange Commission (SEC) to look into Tesla and its board of directors. The request was made in response to worries about potential securities law breaches after CEO Elon Musk purchased Twitter last year.

The senator from Massachusetts addressed several concerns about Tesla shareholders in a thorough nine-page letter sent on Monday to SEC Chair Gary Gensler, according to CBS News.

Senator Warren pointed out that Elon Musk's extensive obligations, including his ownership of Twitter while holding the position of CEO at Tesla, presented issues about possible "conflicts of interest" and whether the board sufficiently safeguarded the interests of shareholders.

The allocation of Tesla's resources to Musk's purchase of Twitter, competing interests resulting from other automakers' advertising, and potential labor law breaches during the shift of Tesla personnel to Twitter were all particularly noted in Warren's letter.

Musk Still Holds Greater Power

Elizabeth Warren asked SEC Chair Gensler to study the matter in-depth to ease these worries. Warren noted that despite Linda Yaccarino's recent appointment as Twitter's new CEO, Elon Musk still has a large amount of power over the social media network as both its executive chairman and chief technology officer, per Teslarati.

The senator stressed the significance of adhering to SEC governance and disclosure rules, citing potential violations of the securities laws, such as the Nasdaq listing requirements requiring a majority independent board, SEC disclosure requirements relating to board independence and related party transactions, and SEC rule 10b-5 regarding statements about Tesla's code of ethics, per her letter to the US Senate.

Tesla is a publicly traded corporation. Thus, according to Warren, Elon Musk and the Tesla board have obligations to the firm's shareholders and the general public.

Read Also: Sony, Microsoft Reach Long-Term Agreement to Keep Call of Duty on PlayStation

The veteran legislator also underlined that Elon Musk and the Tesla board should not be immune from following fundamental SEC laws and regulations because of their personal finances and connections to board members.

Given the concerns regarding Musk's conduct as CEO since his purchase of Twitter and the board's apparent inability to address or disclose any associated risks, Warren urged the SEC to look into Tesla to ensure compliance with securities laws.

Warren Keeping an Eye on Elon Musk's Company

These most recent disclosures add to the concerns Senator Warren already expressed in a December email to Tesla Chair Robyn Denholm. Chair Gensler will address Congressmen personally, the SEC's Office of Public Affairs has confirmed.

Elon Musk and Tesla's board had already been under fire from Senator Elizabeth Warren, who expressed worry about the possible harm that Musk's ownership of Twitter may cause Tesla stockholders.

Elizabeth Warren drew attention to problems with conflicts of interest, theft of company property, and acts by Musk that may not be in the best interests of Tesla and its shareholders in a letter sent to Tesla Chair Robyn Denholm last December. Regarding the Tesla board's response to these concerns, Warren asked a number of questions.