On July 17, Senator Elizabeth Warren called on the U.S. Securities and Exchange Commission (SEC) to initiate investigations into two companies led by Elon Musk, namely Tesla and Twitter, due to potential legal and ethical issues
Warren began by reiterating concerns that she sent to Tesla in December 2022, all of which concern Musk’s dual leadership roles at Tesla and Twitter.
Warren alleged that, following Musk’s acquisition of Twitter, he possibly misused Tesla resources by transferring over 50 employees from Tesla to Twitter. Throughout her letter to the SEC, she suggested that employee transfers may have involved costs that are relevant to investors and said that the action could be a violation of state and federal law.
She also suggested that conflicts of interest could arise around promotion. Musk could conceivably boost Tesla in Twitter’s algorithms or provide Tesla with free advertising. Alternately, Twitter could accept advertisements from competing vehicle companies, earning immediate revenue at a cost to Tesla investors, Warren said.
Warren additionally noted that Tesla investors have written an open letter criticizing Musk’s focus on non-Tesla ventures and have demanded a leadership succession plan. She added that Musk’s recent hiring of Linda Yaccarino as CEO of Twitter does not remove any conflict of interest due to his continued role as CTO of Twitter.
The senator further observed that Musk has appointed friends and relatives to Tesla board positions and noted other signs that the board generally lacks independence.
She named several areas of securities law under which the SEC could potentially begin an investigation, most of which concern Tesla’s failure to disclose the above issues.
Musk, Warren are both focused on crypto
Musk had also suggested the integration of Dogecoin with Twitter before he took over the company, a proposal that has so far resulted only in a change to the company’s logo.
Warren, meanwhile, is known for her anti-crypto stances. She has criticized cryptocurrency’s use in sanctions evasions and the drug trade and has called for investigations into Binance and other firms. She has also expressed direct opposition to cryptocurrency, infamously stating she is “building an anti-crypto army.”
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