posted on the company’s website.[1] Tesla’s disclosed code of ethics requires that the CEO and all senior officials bring to the attention of the Disclosure Committee any information that “affects the disclosures made by Tesla in its public filings,” and to the attention of the Audit Committee any information concerning “any actual or apparent conflicts of interest between personal and professional relationships” or “evidence of a material violation of the securities or other laws.”[2] The Board must determine “appropriate actions to be taken in the event of violations” of this code of conduct. Despite Mr. Musk’s clearly documented conflicts of interest, appropriation of Tesla resources for Twitter, and possible violations of labor laws arising from his takeover of Twitter, the Tesla Board has taken no obvious action. The resulting lack of enforcement of Tesla’s publicly disclosed CEO code of ethics may constitute an “untrue statement” under Rule 10b-5 about the ethics standards that Tesla has publicly promised investors to uphold.[3]
Conclusion
Mr. Musk purchased Twitter and took the company private, and as such, he can run that company as he sees fit – consistent, of course, with relevant federal and state laws.[4] But Tesla is publicly owned, and Mr. Musk and the Board have responsibilities to shareholders and the public in their management of the company. Mr. Musk’s personal wealth – and his personal relationships with Board members – do not shield him or the Tesla Board from meeting basic SEC governance and disclosure rules. The concerns about Mr. Musk’s actions as Tesla CEO since his purchase of Twitter and the Board’s failure to address or disclose potential risks related to them raise obvious questions about Tesla’s compliance with SEC rules and regulations. I am therefore asking the SEC to open an investigation into Tesla to ensure that the actions of Mr. Musk and the Tesla Board have not violated securities laws.
Sincerely, Elizabeth Warren United States Senator |
- ↑ 17 CFR 229.406.
- ↑ Tesla Inc., “Code of Business and Ethics,” p. 16, https://tesla-cdn.thron.com/static/D4EJXC_business-code-of-ethics_UOAY2V.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D"code_of_business_and_ethics.pdf.
- ↑ 17 CFR 240.10b-5.
- ↑ For example, Twitter is still required to meet its long-standing series of FTC Consent agreements. Letter from Sens. Warren, Wyden, Markey, and Hirono, to Twitter Owner Elon Musk and Designated Chief Executive Officer Linda Yaccarino, June 2, 2023, https://www.warren.senate.gov/imo/media/doc/2023.06.02%20Letter%20to%20Twitter%20re%20FTC%20consent%20decree.pdf.
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