Elizabeth Warren Renews Call for Investigation of Elon Musk and Tesla Board — Here's Why

By Trisha Andrada

Mar 22, 2024 09:26 AM EDT

Senator Elizabeth Warren has renewed her call for the Securities and Exchange Commission (SEC) to investigate Tesla, its CEO Elon Musk, and its board of directors.

Warren, a Massachusetts Democrat, is concerned about what she perceives as potential theft of Tesla resources and conflicts of interest caused by Musk's dual roles at Tesla and X, the company's rebranding from Twitter.

Elizabeth Warren Reiterates the Call to Have Tesla, Elon Musk Investigated

Elizabeth Warren expressed further concerns to the federal agency in a lengthy letter dated March 21, saying that new information indicates, "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."

According to CNBC, the reference in Warren's letter relates to a January decision by Judge Kathaleen McCormick of the Delaware Chancery Court, who ruled that Tesla's board of directors had violated their fiduciary obligations by giving Musk's company an "unfathomable" $55.8 billion equity incentive plan.

In the letter, she wrote that "Mr. Musk's recent public statements and actions have raised fresh concerns about conflicts of interest and the redirection of Tesla's resources to Mr. Musk's private companies." She also pointed out that Tesla's share price has dropped by almost 30% so far this year.

Warren also cited Musk's demands for 25% of Tesla's voting power, his desire to base Tesla's incorporation in Texas, and his threat to develop artificial intelligence (AI) products elsewhere if he is not granted that control.

Could This Lead to Another Conflict Between Elon Musk and SEC?

In response to the senator's letter, Elon Musk posted a remark about Elizabeth Warren on his social media account: "Senator Karen's main economic & tax advisor is SBF's Dad. I suspect some of this is coming from him." The Tesla CEO has called Warren "Senator Karen" in previous posts.

Musk was referring to FTX founder Sam Bankman-Fried, also known as SBF, who was found guilty on seven charges in 2023 for his role in the collapse of his crypto business and sister hedge fund Alameda Research in 2022.

According to reports, SBF's father, Joseph Bankman, a Stanford Law professor, advised Warren on her 2016 proposed legislation to simplify the US tax law and signed a letter endorsing the measure.

A representative from Warren's office said that Bankman was not involved in this matter. Over the years, Musk and the SEC have battled several times. Another investigation into Tesla and Musk would exacerbate the tensions between the agency and one of the world's wealthiest persons.