Tesla faces renewed scrutiny over racial bias and Musk’s Tweets

Tesla is facing fresh scrutiny from federal and state regulators about its chief executive’s social media posts and allegations of discrimination at its California factory, the company revealed in a securities filing that was made public Monday.

The electric carmaker said in its annual report that it received a subpoena late last year from the Securities and Exchange Commission requesting information about how the company was complying with a settlement with the commission that requires a lawyer to vet written statements by its top executive, Elon Musk. Tesla also said the California Department of Fair Employment and Housing said last month that the agency had concluded that it had “grounds to file a civil complaint against Tesla.”

The SEC subpoena, which was sent to Tesla on Nov 16, concerns a long-running dispute. The commission sued Musk in 2018 after he said on Twitter that he had “funding secured” to take Tesla private at $420 a share, when that plan was still in its infancy. Musk settled the case by giving up his title as chairman, and Tesla agreed to have a lawyer approve any written statement he made about the company that might contain material information.

The settlement was amended in 2019 after the commission sought to hold him in contempt of court for discussing Tesla’s production outlook on Twitter without running the statements by a lawyer first. The new agreement listed matters that Musk was not to speak about without approval, including Tesla’s financial condition, earnings forecast, proposed acquisitions and production data.

“More recently, on Nov 16, 2021, the SEC issued a subpoena to us seeking information on our governance processes around compliance with the SEC settlement, as amended,” the company said in the annual report.

Tesla did not respond to a request for comment. The automaker stopped answering most questions from the news media in 2020.

Tesla is facing several legal challenges. The National Highway Traffic Safety Administration is investigating whether the company’s Autopilot driver-assistance system has defects that pose a safety risk. The company has also long faced accusations of discrimination and harassment, especially at its factory in Fremont, California, near Oakland. The California Department of Fair Employment and Housing issued a finding Jan 3 saying it believed it had grounds to sue Tesla after conducting an investigation, the company said in its new filing.

In October, a California jury ordered Tesla to pay nearly $137 million to a Black elevator operator who accused the company of ignoring racial abuse at its factory. In its new filing, Tesla said it did not believe the verdict was justified and had requested a new trial. The company added that it would appeal if that request was rejected.

And late last year, seven women sued Tesla on claims that they were subjected to sexual harassment and discrimination at the Fremont plant and other locations. The separate suits were filed in the California Superior Court for Alameda County.

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