- Sen. Elizabeth Warren wrote to Tesla's board, raising questions over Elon Musk's Twitter purchase.
- The senator told the board it must ensure Elon Musk does not treat Tesla as a "private plaything."
Sen. Elizabeth Warren sent a letter to Tesla's board on Sunday questioning whether Elon Musk's Twitter acquisition had led the billionaire to misappropriate the electric-car maker's resources and created "unavoidable conflicts of interest."
Warren said Musk's Twitter takeover has "raised questions about possible violations of securities or other laws, including whether Mr. Musk is funneling Tesla resources into Twitter, a potentially 'improper diversion of resources that might impact Tesla's sales and earnings' and could result in 'delays in programs at Tesla,'" The New York Times was the first to report.
The letter said those misappropriated resources could include labor, like software engineers and senior executives.
The senator warned Tesla's board members that it is their job to ensure "that a controlling shareholder (especially one who is also a Chief Executive Officer, or CEO) does not treat the company as a private plaything." Warren cited reports that Musk has brought in dozen of Tesla employees to assist in his Twitter takeover, saying it could violate the billionaire's "legal duty of loyalty to Tesla."
In her letter, Warren pointed out that Musk's ownership of Twitter could cause a conflict of interest as the billionaire could either scrap ad deals for Tesla competitors and boost the electric-car maker's posts, or give deals to rivals to Tesla's detriment. She also noted Musk could funnel Tesla's funds into Twitter by allowing the car company to overpay for ads on the platform.
A spokesperson for Warren directed Insider to the letter when reached for comment. Musk and a Tesla spokesperson did not respond to a request for comment ahead of publication.
On Sunday, Musk polled Twitter users over whether he should stay on as the CEO of Twitter, and 57% of the over 17 million users that voted in the survey said the billionaire should step down. It is unclear whether Musk will honor the poll and resign.
Tesla's stock has plummeted over 50% this year, but shares of the EV company appeared to respond positively to the possibility of Musk stepping down as CEO of Twitter. The billionaire has offloaded nearly $40 billion worth of Tesla stock in the past 14 months.
Earlier this month, some Tesla investors expressed concern that Twitter had become too much of a distraction for the carmaker's CEO. And Tesla's third largest shareholder, Leo KoGuan, said on Twitter last week that "Tesla needs and deserves to have working full-time C.E.O."
Warren has been critical of Musk in the past. Last year, Warren called the billionaire out for reportedly paying no federal income tax in 2018. Musk later took aim at Warren, calling her "Senator Karen" and saying she reminded him of a "friend's angry mom."
In her recent letter, Warren requested that the board respond by January 3, and that it outline how Musk will meet his fiduciary duties at Tesla amd how the company will avoid conflicts of interest.