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Elon Musk, CEO of electric car maker Tesla, meets with French Minister of Economy and Finance Bruno Le Maire on the sidelines of the sixth edition of the “Choose France” summit at Château de Versailles, outside Paris on May 15, 2023.
Ludovic Marin | pool | via Reuters
senator. Elizabeth Warren, D, Massachusetts. I sent a message He urged the US Securities and Exchange Commission to investigate Tesla and its board of directors regarding “potential conflicts of interest, misappropriation of company assets, and other negative impacts to Tesla shareholders” related to CEO Elon Musk’s takeover of Twitter.
In the letter sent to Securities and Exchange Commission Chairman Gary Gensler on Monday, Warren wrote that Tesla’s board “apparent lack of independence,” combined with “inaction and incomplete disclosure, raises questions about potential violations of securities laws and exchange rules.” Which falls under the supervision of the Securities and Exchange Commission. Jurisdiction.”
The nine-page letter, first obtained by CNBC, reiterates concerns Warren raised in earlier correspondence to Tesla chief Robyn Denholm in December 2022, after Musk led the $44 billion buyout of Twitter. The private purchase deal included $13 billion in debt, and Musk reportedly sold billions of dollars worth of his Tesla stock to fund the deal.
The SEC’s Public Affairs Office did not immediately respond to a request for comment.
Musk appointed himself CEO of Twitter after the deal closed and quickly made sweeping changes to the social network, while laying off more than three-quarters of the staff at the company and authorizing teams of employees from Tesla and SpaceX to help him there.
Citing CNBC’s reporting on the matter, Warren wrote that moving Tesla employees to Twitter could involve “potential violations of federal and state labor law,” and that Tesla’s board of directors did not adequately inform shareholders about the ways in which the two companies have worked together, or may work together. together.
In recent weeks, Musk has named Linda Iaccarino, who previously managed global advertising for Comcast subsidiary NBCUniversal, to the position of CEO of Twitter. Her hiring raised hopes that Twitter’s beleaguered advertising business would soon recover and that Musk would return to focus on Tesla and SpaceX.
Early Saturday, Musk admitted that Twitter’s cash flow remains negative after a 50% drop in ad revenue and “heavy debt.” Tesla is scheduled to report its second-quarter earnings after the bell on Wednesday of this week.
In her letter to the SEC chair, the senator said Yaccarino’s appointment still leaves Musk in charge of Twitter, where he is now chief technology officer and executive chairman, and the arrangement could create a conflict of interest.
Among those, she wrote, is that on Twitter, Musk could decide to “manage the company to maximize much-needed revenue, even if that includes big deals for Tesla competitors and a potential injury to Tesla.” On the contrary, she said, Musk could choose to “play Twitter in Tesla’s favor through favorable algorithms or free advertising.”
Musk has already clashed with the SEC repeatedly. Federal financial regulators charged Musk with civil securities fraud after he tweeted in 2018 that he was considering taking Tesla private for $420 per share and had “secured financing” to do so. The tweets halted trading in Tesla shares and sent the company’s stock price swinging for weeks.
Musk and Tesla paid fines and issued a revised consent decree to settle the fees in 2019, but Musk later moved to terminate or amend that agreement. In May 2023, a federal appeals court judge denied the Tesla CEO’s request to terminate the agreement, which would require any of his tweets containing material Tesla business information to be reviewed and approved by Tesla’s securities attorneys before Musk posts them.
Tesla did not immediately respond to a request for comment.
Disclosure: NBCUniversal is the parent company of CNBC.
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