Sen. Warren warns Tesla board that Musk may have failed to meet his legal duties due to Twitter takeover

Sen. Elizabeth Warren (D-MA) questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the Hart Senate Office Building in Washington, DC, U.S., September 28, 2021.

Elizabeth Warren, D-Mass., wrote to the chair of the board of directors of the company to express her concern that the CEO has failed to meet his legal duties since buying the company.

Every Board of Directors of a company with multiple shareholders is responsible for making sure that a controlling shareholder doesn't treat the company as a private plaything.

The lawmaker has sparred with Musk in the past over the idea of a wealth tax.

The new ownership of the social media platform has raised questions about possible violations of securities or other laws.

According to CNBC, Musk pulled employees from his takeover of the platform in order to skirt state and federal labor laws.

There are obvious questions about whether Mr. Musk is using resources from a publicly traded company to benefit his own private company. She said the arrangements could violate legal requirements to make public employment agreements with executives.

Warren says that Musk has conflicts of interest. She wrote that because of the dependence on advertising revenue from other automobile companies that compete with Musk's company, he may be incentivized to maximize revenue by cutting advertising deals for those companies.

Musk could choose to go the other way, Warren said, running the social network to benefit the company by giving it free advertising or making it more difficult for competitors to reach potential customers. Warren said that the debt Musk took on to buyTwitter could create conflicts, like incentivizing him to haveTesla overpay for Twitter advertising to inject it with cash.

Hate speech on social media could hurt the brand of the company.

She accused the board of failing to take action to protect the company, as its stock fell sharply after Musk's purchase of the social networking site. She said that there appears to be a direct link between the losses and the purchase of the social networking site.

3 about the oversight the board will impose on Musk to ensure he meets his fiduciary duties atTesla, how it's protecting from conflicts of interests, what sort of formal agreements are in place between the two companies and more.

Musk and his lawyer did not reply to the request.

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