Elizabeth Warren calls out Elon Musk for ‘unavoidable’ conflicts of interest caused by Twitter takeover
By Matt Egan, CNN
Senator Elizabeth Warren is raising concerns about conflicts of interest and potential legal violations for Tesla following Elon Musk’s takeover of Twitter.
In a letter to Tesla Chair Robyn Denholm, the Massachusetts Democrat argued Tesla shareholders may be hurt by its CEO’s ownership of Tesla and questioned whether the electric car maker’s board is doing enough to address the issues it poses.
Warren posed a series of questions about how Tesla’s board is dealing with “conflicts of interest, misappropriation of corporate assets and other actions by Mr. Musk that appear not to be in the best interests of Tesla and its shareholders.”
Tesla did not immediately respond to a request for comment on the letter, which The New York Times previously reported on.
Since Musk disclosed in early April that he had taken a major stake in Twitter, the Tesla’s shares have plunged by about 58%, a selloff that has erased nearly $800 billion of market value. Musk, who recently lost his status as the world’s richest person, has repeatedly unloaded Tesla shares in recent months, including another $3.6 billion worth earlier this month.
“Mr. Musk’s acquisition created unavoidable conflicts of interest,” Warren wrote in the letter dated Sunday.
Warren, who has clashed with Musk in the past, specifically called out the fact that that Twitter relies on advertising revenue from General Motors, Ford, Chevrolet and other direct rivals of Tesla.
“As the owner of Twitter, Mr. Musk may 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,” Warren wrote. “Or, perhaps the opposite will occur. As part of his fiduciary duty to Tesla, Mr. Musk may run Twitter to benefit Tesla: for example, he could subtly shift Twitter algorithms so that praise of Tesla products receive greater attention and criticism of Tesla products will be suppressed.”
Warren highlighted questions about potential violations of securities or other laws caused by Musk reportedly pulling key Tesla software engineers and other employees into Twitter.
“This use of Tesla employees raises obvious questions about whether Mr. Musk is appropriating resources from a publicly traded firm, Tesla, to benefit his own private company, Twitter,” Warren said, noting it would violate Musk’s legal duty of loyalty to Twitter and may run afoul of “anti-tunneling” rules that are designed to prevent insiders from extracting resources form their firms.
Noting Tesla’s board has legal obligations it must fulfill, Warren asked the board to respond to a series of questions about its handling of the situation by January 3.
The-CNN-Wire
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