Topline
Sen. Elizabeth Warren, D.-Mass., renewed her push for the Securities and Exchange Commission to investigate the Tesla Board of Directors and Elon Musk over potential conflicts of interest and independence.
Sen. Elizabeth Warren, D.-Mass., said some of Elon Musk’s “recent public statements and actions” ... [+]
Key Facts
Warren sent SEC Chair Gary Gensler a letter Thursday—the second she’s sent to the SEC on the matter—saying “Musk’s recent public statements and actions have raised fresh concerns about conflicts of interest, the redirection of Tesla’s resources to Mr. Musk’s private companies, and other harms to Tesla shareholders.”
Warren alleged in the letter that the board “lacks independence from” Musk because of his “large equity stake and deep personal and professional relationship” with some board members, which were concerns raised by the Delaware Court of Chancery when it found the board breached its fiduciary duties in January by awarding Musk an “unfathomable” $56 million equity compensation plan.
She alleged Musk is using the control he has over Tesla to benefit his other companies—including X, formerly known as Twitter, and xAI—by creating ways for Tesla to channel money to other companies, some of which Tesla board members own stakes in, and threatening to “to divert AI products away from Tesla” unless his ownership increased.
Warren asked the SEC to consider, among other things, if “the longstanding financial and personal connections between” members of the board and Musk constitute violations rules regarding board independence.
Forbes has reached out to Tesla for comment on Warren’s renewed call for investigation into its board.
Crucial Quote
“By all appearances, it seems that the Board continues to operate as if Mr. Musk is the ‘Technoking’ who can do no wrong,” Warren wrote in the letter.
Chief Critic
“Senator Karen’s main economic & tax advisor is (Sam Bankman-Fried’s) Dad. I suspect some of this is coming from him,” Musk said in a post on X responding to news of Warren’s letter.
Forbes Valuation
Forbes estimates that Musk is worth about $194.4 billion, making him the third wealthiest person in the world.
Key Background
Warren called on the SEC last July to investigate the Tesla board over its “failure to manage the actions of (Musk) in his dual role as CEO of Twitter and Tesla.” Warren alleged in that letter that after Musk purchased Twitter and became CEO, the Tesla board failed to ensure that Musk acted in the best interest of Tesla and its shareholders. She also implied the board was acting as if “Musk’s personal wealth – and his personal relationships with Board members … shield(ed) him or the Tesla Board from meeting basic SEC governance and disclosure rules.” The July 2023 letter to the SEC was her second time raising concerns about Musk and the Tesla board as she first raised concerns in December 2022, shortly after Musk purchased Twitter, by sending a letter to the Tesla board chairman about “possible misappropriation of Tesla resources and conflicts of interest related” to his owning Tesla and Twitter. Warren’s office said it did not receive an answer from the Tesla board chair, and the SEC responds to congress members directly about inquiries.
Further Reading
