Sen. Warren presses SEC, again, to investigate Tesla and Elon Musk

Sen. Elizabeth Warren, D-Mass., once again urged the U.S. Securities and Exchange Commission to investigate Tesla, CEO Elon Musk and the company’s board of directors over what she called, “possible misappropriation of Tesla resources and conflicts of interest arising from Mr. Musk’s dual role at Tesla and X— renamed from Twitter.”

Warren, who sits on both the Senate’s banking and the armed services committees, had sent a similar request to the SEC last July, and a letter to Tesla’s board chair Robyn Denholm expressing similar concerns in the past.

In a six-page letter dated March 21, Warren flagged new worries to the federal agency, writing that recent evidence suggests, “Tesla’s Board lacks independence from Mr. Musk, who uses his control over the Board for his personal benefits, rather than in the best interest of Tesla’s shareholders.”

Warren’s letter refers to a Delaware Chancery court ruling in January this year in which the judge, Kathaleen McCormick, found that Elon Musk controlled Tesla and its board had “breached their fiduciary duties when awarding Musk an ‘unfathomable’ equity compensation plan worth $55.8 billion.”

Tesla’s share price has declined around 30% year to date, Warren noted.

“Mr. 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,” she wrote, referring to Musk’s demand for 25% of voting power over Tesla, his wish to move Tesla’s incorporation site to Texas, and his threat to develop artificial intelligence products elsewhere if he doesn’t get that control, among other things.

Tesla’s investor relations VP Martin Viecha and VP of Public Policy and Business Development, Rohan Patel, did not respond to requests for comment. Tesla does not maintain a traditional public relations team in North America.

Musk, who is CEO of Tesla and defense contractor SpaceX, as well as chief technology officer and owner of X, and founder of xAI, Neuralink and The Boring Co., posted a comment about Warren to his social media platform in response to the senator’s letter.

Musk said: “Senator Karen’s main economic & tax advisor is SBF’s Dad. I suspect some of this is coming from him.” Musk has called Warren “Senator Karen” in previous posts.

Musk was alluding to Sam Bankman-Fried, or SBF, who was convicted in 2023 of seven criminal counts against him in relation to the 2022 collapse of his crypto company FTX and sister hedge fund Alameda Research.

SBF’s father, Stanford legal scholar Joseph Bankman, signed a letter in support of her 2016 proposed legislation aimed at simplifying the U.S. tax code and reportedly advised her on the legislation.

A spokesperson for Warren’s office confirmed that Bankman had no involvement.

A spokesperson for the SEC told CNBC via e-mail on Thursday that the agency’s Chair Gary Gensler “will respond to Members of Congress directly,” rather than via public or press statements.

Musk and the SEC have already clashed repeatedly through the years. The federal financial regulators charged Musk with civil securities fraud after he tweeted in 2018 that he was exploring a take-private deal for Tesla at $420 per share and had “funding secured” to do so. Musk’s tweets caused a halt in trading of Tesla shares and sent the company’s share price seesawing for weeks.

The SEC is now investigating whether Musk, or anyone else, committed securities fraud in 2022 as he began buying up stock in Twitter ahead of his leveraged buyout of the company. Musk was late to file a required disclosure about his initial investment in Twitter, before he took the company private and rebranded it as X Corp.

Another probe of Tesla and Musk would add to the tensions between the agency and one of the world’s richest people on paper.

On Thursday, Tesla shares closed down by a point for the day at $172.82, but were ticking slightly higher after hours.

Read Sen. Warren’s full letter to the SEC.

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