Elon Musk’s takeover of Twitter has caused a stir of controversy in the tech world. Democratic Senator Elizabeth Warren has taken notice and has asked the Securities and Exchange Commission (SEC) to investigate potential violations of securities laws by Tesla and its board of directors.
In a nine-page letter to SEC chair Gary Gensler, Warren highlighted the failure of Tesla’s board to prioritize shareholders’ interests. She raised concerns over the allocation of Tesla’s resources into Musk’s involvement with Twitter, particularly with regards to potential advertising from competing Car companies. Warren argued that such conflicts of interest could compromise Tesla’s position and hinder its ability to secure necessary funds.
Warren also raised questions over the transition of Tesla employees to Twitter. She noted that it is unclear whether Tesla employees were invited to work for Twitter or – either implicitly or explicitly – forced to do so and whether their existing employment contracts were respected.
The letter further highlighted the lack of accountability from Tesla’s board in holding Musk responsible for his actions. Warren pointed out that the composition of Tesla’s board, including Musk himself, his brother, a former executive, and close friends, may compromise its independence and impede objective decision-making.
The investigation into Tesla and its board of directors comes at a time when the Electric vehicle maker is struggling to stay afloat amid a pandemic-induced economic downturn. Musk has taken bold steps to re-focus the company and re-invent its products. However, it remains to be seen whether these steps will be enough to keep the company competitive in the long-term.
Regardless of the outcome of the investigation, the case is an important reminder of the need for independent boards of directors and the importance of proper oversight. With the SEC’s investigation, it is hoped that the necessary steps will be taken to ensure that Tesla’s management makes decisions in the best interests of its shareholders.