In light of recent competition from Threads, rate limits, pending lawsuits, advertising losses and a new ad revenue-sharing program with creators, Twitter has seemingly doubled down on chaos in recent weeks.
And it is precisely that chaos, specifically as it relates to Elon Musk’s other company Tesla, that Sen. Elizabeth Warren (D-MA) has a problem with.
Warren, who has previously gone after banks, cryptocurrency and Bed, Bath & Beyond, sent a letter to the U.S. Securities and Exchange Commission (SEC) Monday requesting that the organization investigate the many conflicts of interest that have arisen from Elon Musk’s dual role with Twitter and Tesla.
Warren, saying that Musk’s “actions since purchasing Twitter have raised concerns about conflicts of interest, misappropriation of corporate assets, and other negative impacts to Tesla shareholders,” asserted that Tesla’s board has not upheld its “legal duty” in ensuring “Musk act in the best interest of Tesla.”
“The Board’s inaction and inadequate disclosures, and the close relationships of several Board members to Mr. Musk, raise questions about the effectiveness of their corporate governance and potential violations of securities laws,” Warren wrote.
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Though she acknowledged that Musk recently appointed a replacement CEO to run Twitter in the form of Linda Yaccarino, she alleged that Musk “intends to continue overseeing core functions of the business.”
The SEC did not immediately respond to a request for comment.
In her letter the SEC chairman, Warren expressed concern over the misappropriation of Tesla’s resources, citing Musk’s “funneling” of more than 50 Tesla employees to Twitter. She said that this “appropriation of Tesla employees” could have been a violation of both state and federal labor laws.
Warren also cited conflicts of interest in the form of Twitter’s “reliance” on ad revenue from companies like Ford and GM that are in “direct competition” with Tesla.
“As the owner of Twitter, Mr. Musk could decide to run the company to maximize badly-needed revenue, even if that includes great deals for Tesla’s competitors and potential injury to Tesla,” she wrote. “Alternatively, Mr. Musk could run Twitter to benefit Tesla through favorable algorithms or free advertising.”
A group of Tesla investors published an open letter, which Warren cited, to the company’s board in April, expressing concern over the board’s “meager oversight of Elon Musk and other critical aspects of corporate strategy.”
Warren went on to lay out several possible violations of SEC laws, from violations of Nasdaq listing rules to disclosure requirements regarding board independence and codes of ethics.
This would not be the first time that Musk and the SEC butt heads. The organization charged Musk with civil securities fraud for a 2018 tweet that impacted Tesla’s shares.
Tesla’s stock was up nearly 2% Monday.
Chairperson Gary Gensler will respond to members of Congress directly, rather than through the media, an SEC spokesperson said, when asked for a comment.
Read the full letter here.