Brad Lander, the New York City comptroller who wants the city's law department to file a lawsuit against electric car maker Tesla for securities fraud, has declared his support for Randi Weingarten, president of The American Federation of Teachers labor union, who has asked chief fiduciary officers who oversee most major U.S. public pension funds to quickly review their current holdings in Tesla.
Lander, who serves as the custodian and a trustee of the $284.3 billion New York City Retirement Systems, praised Weingarten’s efforts and criticism of Tesla and its CEO Elon Musk.
“Randi Weingarten is right,” Lander said in a statement. “Elon Musk’s absentee leadership at Tesla is failing workers and investors. I echoed these concerns in my call yesterday for the New York City Law Department to pursue legal action against Tesla for materially misrepresenting Musk’s role in the company. The Tesla board has failed at its most basic responsibilities: no independent oversight, no full-time CEO, and no enforcement of its own rules regarding Musk’s use of Tesla shares as loan collateral. These management and governance failures have caused Tesla stock to plummet. I stand with President Weingarten in demanding full transparency from Tesla about these loans and will continue fighting to hold the company accountable to protect investors.”
Officials at Tesla could not be reached for comment.
Weingarten wrote a letter to more than 75 state and city pension fund chief fiduciary officers to voice her concerns about the carmaker. Tesla shares, which according to the letter account for a “material portion” of those funds’ investments, have suffered a 30% decline year to date and a 40% drop from an all-time peak in December, AFT noted in a release issued in conjunction with Weingarten’s letter. Tesla’s market capitalization has been cut almost in half, to $800 billion from $1.5 trillion, in just the last three months, the letter noted.
Weingarten pointed out in her letter that Tesla’s first quarter sales had fallen 13% from the first quarter of 2024, “below analysts’ worst expectations” and that Wells Fargo has set a price target for Tesla of $130, one-half its current value.
The letter also requested that state treasurers and comptrollers ask asset managers to assess their Tesla holdings and demand the company share information about billions in outstanding corporate loans partly secured by Musk’s 13% stake in the company.
At the end of 2024, the letter noted, public records revealed Musk had pledged more than 230 million Tesla shares as collateral for unspecified loans, with no disclosure over the price at which he would face a “potentially ruinous margin call.”
The letter was sent to state treasurers and city comptrollers across the country, including stewards of the $349.7 billion California State Teachers’ Retirement System, West Sacramento; the $109 billion Teachers’ Retirement System of the City of New York; and the $13.1 billion Chicago Teachers’ Pension Fund, the release noted.
A spokesperson for AFT, which represents 1.8 million educational workers nationwide, said Weingarten would not comment beyond the content of her letter and the ATF news release.
Fernando Vinzons, the chief investment officer of CTPF, said as of March 13, CTPF managers held 209,744 shares of Tesla stock, about $50.5 million, representing 0.4% of the fund's total portfolio.
“It’s important to note that most of our Tesla exposure (nearly 90%) comes from our passive portfolio,” said Carlton W. Lenoir Sr., CTPF executive director, in a statement. “These ‘indexed funds’ rise and fall with the market. That can be seen as both a strength and a limitation because we own the market, and do not get to select individual stocks with these investments.”
A spokesperson for CalSTRS declined to comment on Tesla specifically, but noted that the pension fund is “a global investor with a long-term horizon and is focused on sustainable business practices that lead to global economic growth and prosperity. We believe diversification is an important principle in long-term investing to reduce risk and maximize returns by allocating investments among various financial instruments, industries, regions and sectors. While the vast majority of our public equity holdings are held in passive equity portfolios, we monitor all our holdings and engage companies to address the risks in the portfolio and develop and implement action plans to mitigate them.”
Weingarten also noted in her letter that in February, she wrote to asset managers BlackRock, Vanguard Group, State Street Global Advisors, T. Rowe Price Group, Fidelity Investments and TIAA, warning that her union’s members’ exposure to tens of billions of dollars in Tesla stock in their portfolios posed an unacceptable retirement risk.
“AFT members participate in pension funds totaling an estimated $4 trillion,” Weingarten wrote in the letter. “To date, none of the (asset) managers have replied.”
A spokesperson for TIAA said “as a firm that has served the education community for more than 100 years, we appreciate hearing from the American Federation of Teachers. Our subsidiary Nuveen manages a wide array of investment funds for a broad range of clients, including index-based funds that reflect Tesla’s position within those indices. The long-term interests of our participants and clients are the primary driver of our investment strategy.”
TIAA has $1.3 trillion in AUM.
BlackRock and T Rowe Price declined to comment. The other three asset managers could not be immediately reached for comment.
“Our members’ right to retire with dignity and grace after decades of service to families and communities is paramount,” added Weingarten in the letter. “It’s why we were bitterly disappointed in the initial lack of response from asset managers, and why today we are urgently asking chief fiduciaries to demand additional and immediate clarity.”
