U.S. Sen. Elizabeth Warren renewed calls on the Securities and Exchange Commission to investigate whether Tesla ran afoul of regulations governing board independence at public companies.
Warren, in a letter sent this week, also expressed concern about potential conflicts of interest between Tesla and the private companies Elon Musk runs, including X. She asked the agency to examine whether the carmaker’s board had been up-front with investors about any associated risks.
“New evidence has emerged in recent months that deepen my concerns that Tesla’s Board lacks independence from Mr. Musk, who uses his control over the Board for his personal benefits, rather than in the best interest of Tesla’s shareholders,” wrote Warren, a Democrat from Massachusetts.
Warren raised similar concerns in a letter to the SEC last summer. In her latest correspondence, she cited a Wall Street Journal investigation documenting the close personal and financial ties between Musk, who is Tesla’s chief executive, and several board members, including some who are designated as independent.
Tesla has paid its directors mostly in stock options, and many of those currently serving on the company’s eight-person board have received equity worth hundreds of millions of dollars, the Journal reported in February. Several current and former Tesla board members have additionally invested millions of dollars in Musk’s companies.
The Journal also reported that some current and former Tesla directors have consumed drugs with Musk.
A SEC spokesperson said that the agency’s chair, Gary Gensler, would respond to members of Congress directly and that the SEC doesn’t comment on the existence or nonexistence of a possible investigation. Tesla and Musk didn’t respond to requests for comment.
In response to a Journal article in January about Musk’s illegal drug use, a lawyer for Musk said the Tesla CEO is “regularly and randomly drug tested at SpaceX and has never failed a test.”
Musk, in an interview with former CNN host Don Lemon released this month, said he has taken medically prescribed ketamine to help with depression and said he doesn’t feel he has abused the drug.
“I can’t really get wasted because I can’t get my work done,” Musk said, during the interview, which was filmed at Tesla’s headquarters in Texas.
“From a standpoint of Wall Street, what matters is execution,” Musk said.
Nasdaq, the stock exchange where Tesla trades, requires that a majority of board members be independent, meaning they cannot be an employee, family member or someone with a relationship that “would interfere with the exercise of independent judgment.”
The SEC can take enforcement action against companies that mislead investors about the independence of board members. In 2022, the SEC imposed a $325,000 fine on a lifestyle company that didn’t disclose one director’s financial connection to its chief executive officer.
Warren also questioned Tesla’s decision to advertise on X, which Musk owns. She raised concerns about the billionaire’s January post stating he would be uncomfortable making Tesla a leader in artificial intelligence and robotics without controlling about 25% of the company.
“Despite the growing concerns posed by Mr. Musk’s conflicting roles at Tesla and his private companies, the Board appears to have taken no action to address these risks or protect its shareholders,” Warren wrote.
Dave Michaels and Emily Glazer contributed to this article.
Write to Rebecca Elliott at rebecca.elliott@wsj.com and Brody Mullins at Brody.Mullins@wsj.com