Sen. Elizabeth Warren (D-Mass.) would urge the Securities and Exchange Commission to investigate Tesla Inc.‘S TSLA independence of the board.
What happened: Warren wrote to the SEC, expressing her concerns about the board’s independence from the CEO Elon Muskthat she believes he might use his control for personal gain rather than for the benefit of Tesla shareholders, THE Wall Street Journal reported. This is not the first time Warren has raised these concerns, as he previously wrote to the SEC last summer.
In the letter sent this week, Warren expressed concern about potential conflicts of interest between Tesla and Musk’s private companies, including social media platform X. She also questioned Tesla’s recent decision to advertise on the platform.
“Despite growing concerns posed by Musk’s conflicting roles at Tesla and his private companies, the Board appears to have taken no action to address these risks or protect his shareholders,” Warren wrote, according to the report.
Moss reacts: Musk responded to the WSJ report on X by claiming that Warren’s top economic and tax advisor is a Stanford professor Giuseppe Bankmannfather of founder of collapsed cryptocurrency exchange FTX Sam Bankman Fried who was convicted of fraud in November.
“I suspect some of this is coming from him,” Musk wrote.
Because matter: The NASDAQ stock exchange requires a majority of board members to be independent. The SEC can intervene if it concludes that a company misled investors about the board’s independence.
Warren, however, is not the first to question the independence of Tesla’s board of directors.
In January, judge of the Delaware Court of Chancery Kathleen McCormick rescinded a 2018 pay package worth about $56 billion awarded to Musk by Tesla’s board of directors in 2018 calling it an “unfathomable sum.” The judge found the board was not sufficiently independent from Musk and the governance process leading to the grant, as well as “unfair” value to other shareholders.
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