Elon Musk, chief executive of electric carmaker Tesla, meets with French Economy and Finance Minister Bruno Le Mel.
Ludovic Marin | Pool | via Reuters
senator. Elizabeth Warren, Democrat of Massachusetts, sent a letter Urging the SEC to investigate tesla Tesla and its board may have “conflicts of interest, misappropriation of corporate assets, and other adverse effects on Tesla shareholders” that may arise from CEO Elon Musk’s acquisition of Twitter.
In a letter sent Monday to SEC Chairman Gary Gensler, Warren wrote that Tesla’s board’s “apparent lack of independence,” combined with “inaction and incomplete disclosure,” has raised questions about possible violations. Challenges of securities laws and trading rules governed by the SEC. jurisdiction. “
The nine-page letter, first obtained by CNBC, reiterates concerns raised by Warren in a December 2022 letter to Tesla Chairman Robyn Denholm, when Musk dominated the The $44 billion acquisition of Twitter. The going-private deal included $13 billion in debt, and Musk reportedly sold billions of dollars worth of Tesla stock to finance the deal.
The SEC’s Office of Public Affairs did not immediately respond to a request for comment.
After the deal, Musk named himself CEO of Twitter and quickly overhauled the social network while cutting more than three-quarters of the company’s workforce and empowering teams of Tesla and SpaceX employees to assist him .
Citing a CNBC report on the matter, Warren wrote that moving Tesla employees to Twitter could constitute a “potential violation of state and federal labor laws” and that Tesla’s board had failed to properly inform shareholders of how the two companies were working together, Or can work together.
In recent weeks, Musk tapped Linda Yaccarino, who previously ran global advertising for Comcast’s NBCUniversal, as CEO of Twitter. Her hiring has fueled hopes that Twitter’s troubled advertising business will soon recover and that Musk will refocus on Tesla and SpaceX.
Earlier on Saturday, Musk acknowledged that Twitter was still cash-flow negative after a 50% drop in ad revenue and “heavy debt.” Tesla is scheduled to report its second-quarter earnings after the close on Wednesday.
In his letter to the SEC chairman, the senator said Jacarino’s appointment still puts Musk in charge of Twitter, where he is now its chief technology officer and executive chairman, an arrangement that could create a conflict of interest.
Among other things, she tweeted that Musk may “decided to run the company to maximize much-needed revenue, even if that includes offering huge deals to Tesla’s competitors and potentially hurting Tesla.” Instead, she said Musk could choose to “run Twitter to benefit Tesla through a favorable algorithm or free advertising.”
Musk and the SEC have clashed multiple times. Federal financial regulators charged Musk with civil securities fraud after Musk tweeted in 2018 that he was considering taking Tesla private at $420 a share and had secured “funding.” . The tweets halted trading in Tesla shares and sent the company’s share price volatile for weeks.
Musk and Tesla paid the fine and entered into an amended consent decree to settle the charges in 2019, but Musk later moved to terminate or amend the agreement. In May 2023, a federal appeals court judge rejected the Tesla CEO’s request to terminate the agreement, which required that any tweets he tweeted containing material information about Tesla’s business must go through Tesla before Musk posted them. Review and approval by securities attorney.
Tesla did not immediately respond to a request for comment.
Disclosure: NBCUniversal is the parent company of CNBC.
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