Elizabeth Warren asks SEC to investigate Tesla

Democratic Senator Elizabeth Warren asked the SEC to investigate Tesla and its board of directors to determine whether they violated securities laws after CEO Elon Musk took over Twitter last year.

In a nine-page letter to the Securities and Exchange Commission Monday, the Massachusetts senator said Elon Musk's long list of responsibilities, from owning Twitter to remaining Tesla's CEO, "have raised concerns about conflicts of interest, misappropriation of corporate assets, and other negative impacts to Tesla shareholders." Warren added that the electric car company's board failed to ensure it has acted in shareholders' best interests.

Chief among Warren's concerns in the letter: funneling Tesla (TSLA) resources into Musk's Twitter takeover, conflicts of interest regarding advertising from other car companies, and possible labor law violations when transitioning some Tesla (TSLA) employees to Twitter.

Warren is asking SEC chair Gary Gensler to conduct the review. Although former NBCUniversal executive Linda Yaccarino took over as the new CEO of Twitter last month, Musk has retained significant control over the site.

Some investors and lawmakers have grown increasingly concerned about Musk's chaotic control of Twitter, which he bought for $44 billion. Warren wrote that that disorder has spilled over into Musk's management of one of the most influential electric car companies in the United States. Oppenheimer & Co. downgraded its rating on Tesla solely because of risks posed by the billionaire's ownership and management of Twitter in 2022. In an interview with the Wall Street Journal Friday, tech investor Cathie Wood said she wrote down her Twitter stake by 47%.

Warren noted Twitter relies on advertising from Tesla's direct competitors, such as Audi (AUDVF) and GM (GM), creating a conflict of interest as the platform is trying to shore up funds.

A group of 17 major Tesla investors in April wrote an open letter to the company's board complaining Musk is just too distracted to run the company.