Elizabeth Warren Targets Tesla's Board: Senator Calls For SEC Investigation Of Elon Musk's Twitter Takeover

Elon Musk's Twitter takeover took many by surprise, especially Tesla Inc TSLA shareholders, who expressed concerns about potential impacts on the electric vehicle company. Now an SEC investigation could be on the horizon.

What Happened: Sen. Elizabeth Warren (D-Massachusetts) has urged the SEC to investigate Tesla over Musk's $44-billion acquisition of Twitter last year, according to a CNBC report. 

Warren highlighted potential "conflicts of interest" and "misappropriation of corporate assets" in a letter to SEC Chair Gary Gensler on Monday. 

"Despite recent and repeated calls from investors to address these actions, the Board appears to have failed to uphold its legal duty to ensure that Mr. Musk act in the best interest of Tesla," Warren said in the letter. 

She targeted Tesla's board, accusing the board of inaction and inadequate disclosures that have raised concerns about the effectiveness of the board's corporate governance and potential violation of securities laws. Warren also suggested that Musk's close relationships with several board members may have contributed to their inaction. 

When Musk acquired the social media platform late last year, he reportedly sold billions of dollars in Tesla stock in order to help fund the transaction. Investors also became concerned that Musk's increased focus on Twitter would eat into time spent on Tesla.

See Also: Elon Musk Accused Of Financing 'Unlawful Harassment Campaign' Against Dogecoin Investors

In May, Musk officially announced that Linda Yaccarino would take over as the new CEO of Twitter. In her letter to the SEC, Warren said Musk is likely to retain significant control over the company and intends to continue to oversee Twitter's core functions, despite hiring Yaccarino.

"Though Mr. Musk recently announced the hiring of Linda Yaccarino as the new CEO of Twitter, this does little to address the concerns to Tesla and its shareholders related to his dual role," Warren said. 

Warren noted that Twitter's reliance on ad revenue from auto companies could pose problems for Tesla shareholders. Musk could offer great advertising deals to Tesla competitors in order to maximize "badly-needed revenue," she said. 

Over the weekend, Musk acknowledged that Twitter's cash flow is still negative as the result of a 50% decline in advertising revenue on top of "heavy debt."

Tesla is set to report second-quarter financial results this week. The EV company is expected to report earnings of 81 cents per share on quarterly revenue of $24.53 billion, per estimates from Benzinga Pro.

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TSLA Price Action: Tesla shares were up 1.87% at $286.63 at the time of writing, according to Benzinga Pro.

This illustration was generated using artificial intelligence via MidJourney.