Sen. Elizabeth Warren is again calling on the Securities and Exchange Commission to investigate whether Elon Musk’s dealings with Tesla board members have crossed the line from a CEO who answers to independent board members with the power to hire and fire the executive, to a CEO with a board in his thrall.
In a letter to SEC Chair Gary Gensler today, Warren raised a litany of concerns about Musk, arguing that all of the issues should be probed by the SEC. Warren said Musk treats publicly traded Tesla like a company he owns outright when, in fact, shareholders own Tesla. Musk, also a shareholder, owns 20.5% of the electric vehicle manufacturer. She said that when Musk posted on X in January that he would be uncomfortable developing Tesla as a leader in AI and robotics without having a 25% stake in the company, he was effectively opting Tesla out of substantial growth opportunities for the company, improperly putting the interests of Tesla below those of xAI, a startup he founded in March 2023.
In response to that “threat” to Tesla, wrote Warren, the board—which includes Musk’s brother, Kimbal Musk, and Tesla’s former chief technology officer, JB Straubel—remained silent. Directors issued no comments to clarify the nature of Musk’s control of Tesla, the board’s independent oversight, his ownership stake in the company, or its opportunities in the field of AI, she said.
Warren’s new urging comes at a murky time for Musk. Tesla stock is down 30% this year and Musk has faced calls from investors to shape up his act as a CEO. Still, Musk has a huge fan base. At a recent Singularity University event where Musk appeared on a video call with founder and director Peter Diamondis, Musk described his goal of reaching the moon after another five or six space flights this year. The audience cheered after he knocked on his forehead to avoid jinxing himself.
But despite his fans, Warren and regulators have criticized Musk’s willingness to bend the norms for public company CEOs. The SEC has previously investigated Musk or his public statements at least three times. Warren also raised the financial links between Musk and some of his board members, which include investments in some of his private companies. Warren previously wrote to Tesla board chair Robyn Denholm to inquire about the misappropriation of Tesla executives and resources to X after Musk’s $44 billion takeover of what was then called Twitter in Oct. 2022. Warren said Denholm never wrote her back.
Warren also complained that Tesla suddenly reversed course and began paying for ads on X after Musk bought the company. “Mr. Musk has also created a pathway that would allow Tesla to channel money to X though paid advertising,” wrote Warren. “Musk acknowledged it was ‘ironic’ to change his stance only few months after buying Twitter, which is ‘highly dependent on ads.’”
Musk’s relationships with some board members go back a decade or longer and Warren noted that the recent Delaware Chancery Court ruling that vacated Musk’s $56 billion compensation plan and called into question the Tesla board’s independence further underscored those worries.
“Despite the growing concerns posed by Mr. Musk’s conflicting roles at Tesla and his private companies, the Board appears to have taken no action to address these risks or protect its shareholders,” said Warren. “By all appearances, it seems that the Board continues to operate as if Mr. Musk is the ‘Technoking’ who can do no wrong.”
An SEC spokesperson said in a statement to Fortune that Gensler would respond to members of Congress directly.
Tesla did not respond to a request for comment.
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