Senator Elizabeth Warren isn’t happy with Elon Musk’s monumental workload—and the possibility that it’s damaging shareholders’ interests.
Warren, the Democratic senator from Massachusetts, wrote to the Securities and Exchange Commission (SEC) on Monday to call for a probe into Musk’s various business interests.
In the nine-page letter first obtained by CNBC, Warren urged the SEC to investigate how Tesla’s board of directors had managed “the apparent conflicts of its CEO, Elon Musk.”
She slammed the world’s richest person for spreading himself too thin following his $44 billion acquisition of Twitter late last year, noting that his decision to simultaneously act as CEO of both Twitter and Tesla had “raised concerns about conflicts of interest, misappropriation of corporate assets, and other negative impacts to Tesla shareholders.”
“Despite recent and repeated calls from investors to address these actions, the board appears to have failed to uphold its legal duty to ensure that Mr. Musk act in the best interest of Tesla,” Warren wrote.
She alleged that Tesla’s board had not sufficiently informed shareholders how major concerns around Musk’s ability to devote enough time to the company were, which undermined shareholders’ ability to make informed voting and investing decisions.
The independence of the board, Warren suggested, was also questionable, with several of its members having long-term or close personal relationships with the tech mogul.
“Mr. Musk purchased Twitter and took the company private, and as such, he can run that company as he sees fit — consistent, of course, with relevant federal and state laws. But Tesla is publicly owned, and Mr. Musk and the Board have responsibilities to shareholders and the public in their management of the company. Mr. Musk’s personal wealth — and his personal relationships with Board members — do not shield him or the Tesla Board from meeting basic SEC governance and disclosure rules.”
Musk still a ‘dominant force’ at Twitter
While Warren conceded that Musk had recently stepped down from the top job at Twitter, she argued that the move had done “little to address the concerns to Tesla and its shareholders related to his dual role.”
When Musk announced in May that he had chosen NBCUniversal’s advertising chief Yaccarino to be Twitter’s new CEO, he noted that she would be focused on business operations “while I focus on product design and new technology” — hinting that he would still be heavily involved in the social media company.
Since Musk’s Twitter deal completed, Tesla investors have aired frustrations with Musk being distracted by the social media platform. Earlier this year, a group of long-term Tesla investors who collectively hold shares worth $1.5 billion wrote to the firm’s board to explain that they had grown “increasingly concerned with governance and leadership issues at the company.”
Musk’s decision to buy Twitter sent Tesla stock on a wild ride, with shares of the company plummeting 58% between his announcement of his intention to take over the company last April and the end of 2022. Though the stock is still far off its 2021 peak, it has staged a recovery this year and gained more than 160% since the beginning of 2023.
However, Warren suggested on Monday that investors were still jittery.
“Despite hiring Ms. Yaccarino, [Musk] is likely to retain ‘significant control’ over the company and intends to continue overseeing core functions of the business,” she said.
“Should Mr. Musk change his mind about stepping down as CEO, there is nothing to stop him from firing Ms. Yaccarino and returning to the helm — because Twitter lacks a board of directors, so long as Mr. Musk retains majority ownership of the private company, he will remain a dominant force.”
Representatives for Tesla and Twitter did not respond to Fortune’s request for comment.
Warren vs. Musk
It’s not the first time Warren has been at loggerheads with the Tesla and SpaceX cofounder.
She wrote to Tesla’s board in December accusing Musk of creating “unavoidable conflicts” and potential misappropriation of assets relating to his Twitter acquisition.
During her campaign for the Democratic presidential nomination in 2020, Warren proposed introducing a wealth tax on ultra-rich Americans. She has since doubled down on the need for such a policy, naming Musk explicitly as an example of someone who should be paying more taxes.
“I’m happy to celebrate success, but let’s remember, Elon Musk didn’t make it on his own. He got huge investments from the government, from taxpayers, from those public school teachers and those minimum wage workers who’ve been paying their taxes all along to get that business up and running and help see it through rough times,” she said in a television interview with CNBC last year.
“When you make it big...let’s also ask that you pay a fair share in taxes. The 99% pay about 7.2% of their total wealth in taxes every year. That top one-tenth of 1% pays less than half as much. That’s not right. Make an investment so the next Elon Musk gets a chance to make it big as well.”
Musk has made it clear he’s opposed to a wealth tax being imposed on America’s richest people, saying in a tweet last year that “SpaceX and Tesla would probably have died” if such a levy had existed in 2008.
