During the “Choose France” Summit at the Chateau de Versailles, Tesla CEO Elon Musk met with French Minister for the Economy and Finances, Bruno Le Maire. The meeting took place on May 15, 2023, and was featured in a photo taken by Ludovic Marin of Pool, via Reuters.
Senator Elizabeth Warren, representing Massachusetts, has sent a letter to the U.S. Securities and Exchange Commission (SEC), urging them to investigate Tesla and its board of directors. The letter raises concerns about possible conflicts of interest, misappropriation of corporate assets, and negative impacts to Tesla shareholders, all related to CEO Elon Musk’s use of Twitter.
In the letter addressed to SEC Chair Gary Gensler, Warren highlights the “apparent lack of independence” of the Tesla board from Musk and raises questions about potential violations of securities laws and exchange rules falling under the SEC’s jurisdiction. This nine-page letter builds upon concerns previously expressed by Warren in December 2022, when Musk led a $44 billion buyout of Twitter, including $13 billion in debt and the sale of billions of dollars worth of Tesla shares.
As of now, the SEC’s Office of Public Affairs has not responded to the letter.
Following the Twitter deal, Musk appointed himself CEO of the social network and made significant changes, reducing the company’s staff while involving teams from Tesla and SpaceX. Warren’s letter cites CNBC’s reporting, questioning potential violations of state and federal labor laws resulting from the transfer of Tesla employees to Twitter. Additionally, shareholders were allegedly not adequately informed about the relationship between the two companies.
In recent weeks, Musk appointed Linda Yaccarino, formerly in charge of global advertising at NBCUniversal, as Twitter’s CEO. This move raised hopes for a recovery in Twitter’s advertising business and the possibility of Musk refocusing on Tesla and SpaceX. However, Musk recently acknowledged Twitter’s negative cash flow due to ad revenue declines and debt.
Warren’s letter to the SEC chairman emphasizes that Musk’s continued involvement with Twitter, as CTO and executive chairman, may create conflicts of interest.
Sen. Elizabeth Warren, D-Mass., questions Internal Revenue Service Commissioner Daniel Werfel during the Senate Finance Committee hearing on “The President’s Fiscal Year 2024 IRS Budget and the IRS’s 2023 Filing Season,” in Dirksen Building on Wednesday, April 19, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
Concerning Musk’s role at Twitter, Warren raises the possibility of him running the company to benefit Tesla’s competitors or to promote Tesla through favorable algorithms or free advertising. This potential conflict of interest adds to the existing clashes between Musk and the SEC. In 2018, the SEC charged Musk with civil securities fraud after his tweets about taking Tesla private caused stock price volatility. Musk and Tesla reached a settlement in 2019, but Musk has since tried to end or modify the agreement.
In May 2023, a federal appeals court judge denied Musk’s request to end the agreement. The terms require that any of his tweets containing material Tesla business information be reviewed and approved by a securities lawyer at Tesla before posting.
Tesla has not yet commented on this matter.
Disclosure: CNBC’s parent company is NBCUniversal.
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