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Elizabeth Warren calls on SEC to investigate Tesla, Elon Musk over governance issues once again

Sen. Elizabeth Warren, D-Mass., urged the Securities and Exchange Commission to investigate Tesla, CEO Elon Musk, and the company’s board of directors for what she described as “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 serves on both the Senate banking and armed services committees, had filed a similar request to the SEC in July, as well as a letter to Tesla’s board chair Robyn Denholm, voicing similar concerns.

In a six-page letter dated March 21, Warren expressed new concerns to the federal agency, saying that recent information indicates that “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 finding in January this year, in which the judge, Kathaleen McCormick, determined that Elon Musk owned Tesla and its board had “breached their fiduciary duties when awarding Musk a ‘unfathomable’ equity compensation plan worth $55.8 billion.”

Warren stated that Tesla’s share price has fallen by almost 30% year to far.

“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 Tesla’s voting power, his desire to relocate Tesla’s incorporation site to Texas, and his threat to develop artificial intelligence products elsewhere if he does not obtain 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 calls for comment. Tesla doesn’t have a standard public relations team in North America.

Musk, the CEO of Tesla and defense contractor SpaceX, as well as the chief technological officer and owner of X, and the founder of xAI, Neuralink, and The Boring Co., responded to Warren’s letter on social media.

Musk stated, “Senator Karen’s primary economic and tax advisor is SBF’s father. I believe part of this is coming from him.” Musk has addressed Warren as “Senator Karen” in past writings.

Musk was referring to Sam Bankman-Fried, or SBF, who was convicted in 2023 on seven felony counts stemming from the 2022 collapse of his crypto business FTX and sister hedge fund Alameda Research.

SBF’s father, Stanford legal expert Joseph Bankman, wrote a letter supporting her 2016 proposed legislation to streamline the US tax code and apparently advised her on it.

A representative from Warren’s office confirmed that Bankman had no participation.

On Thursday, a representative for the SEC informed CNBC via email that the agency’s Chair, Gary Gensler, “will respond to Members of Congress directly,” rather than through public or press pronouncements.

Musk and the SEC have previously battled several times over the years. Musk was charged with civil securities fraud by federal financial regulators after tweeting in 2018 that he was investigating a takeover of Tesla at $420 per share and had “funding secured” for the transaction. Musk’s tweets halted Tesla stock trading and caused the company’s share price to swing for weeks.

The SEC is currently examining if Musk or anybody else committed securities fraud in 2022, when he began buying Twitter stock ahead of his leveraged takeover of the firm. Musk was late in filing a necessary statement about his original investment in Twitter, which he later took private and rebranded as X Corp.

Another investigation of Tesla and Musk would heighten tensions between the agency and one of the world’s wealthiest persons on paper.

Tesla shares fell by one percent on Thursday, closing at $172.82, but were marginally higher after hours.



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