New York City Comptroller Brad Lander has asked the city law department to file a federal securities fraud lawsuit against Tesla Inc. on behalf of the city’s pension system, alleging the company made “material misstatements” about CEO Elon Musk’s role now that Musk is supervising the federal job-cutting effort known as the "department of government efficiency."
“Ever since Elon Musk took over DOGE and became best-friend-in-chief with President Trump, Tesla — where Musk is supposed to be CEO — has suffered financially, causing enormous losses for Tesla shareholders,” Lander said in a news release April 1.
Those shareholders include the five New York City pension funds, for which Lander is custodian. Their aggregate value of Tesla common stock fell to $831 million on March 28 vs. $1.3 billion on Dec. 31. Total pension system assets are $284.3 billion.
“We have long expressed concerns that the Tesla board has failed to provide independent oversight, or to require that Musk — or someone else — serve as a full-time CEO,” Lander said.
“Now, it appears that material misstatements from Tesla misled investors about his role at the company. That’s why I’m calling on the law department to file securities litigation: because Elon Musk is so distracted that he’s driving Tesla off a financial cliff and taking down shareholder value with it,” he added.
Suing Tesla “could force the changes in governance and leadership that Tesla needs, and help recover some of our pension systems’ losses,” Lander said. “Otherwise, we may need to consider divestment.”
Lander asked the city's law department, which is the legal representative for the pension funds, to file a 10b-5 shareholder lawsuit against Tesla, on behalf of the New York City pension systems, “for their material misrepresentations regarding the leadership of the company,” the news release said.
“Rule 10b-5, part of the Securities Exchange Act of 1934, protects investors from misleading statements, material omissions, and fraudulent or manipulative practices,” the news release said.
By suing Tesla’s board of directors, the city pension funds “can pursue financial damages to cover losses and also seek governance changes, including a full-time CEO,” the news release said.
“Comptroller Lander believes these outcomes would be preferable to divestment, since they could restore some of pension systems’ losses, address Tesla’s governance weaknesses, and improve Tesla’s long-term value as an electric vehicle company,” the news release said.
A company representative did not return a request for comment.
