Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—NYC pensions consider suing Tesla for lying about Musk’s role, (Apr 4, 2025)

By Anne Sherry, J.D.

“Elon Musk is so distracted that he’s driving Tesla off a financial cliff,” said NYC Comptroller Brad Lander.

New York City Comptroller Brad Lander is recommending that the city’s legal department sue Tesla on behalf of the city’s pension systems. Lander asserts that Tesla misled investors about Elon Musk’s role at the company by representing that he acts as a full-time CEO when in fact he has “clearly abandoned Tesla in favor of DOGE and President Trump’s MAGA mission.”

Lander also argued that Musk has caused nearly $300 million in stock value for the city’s pension systems by harming the market for electric vehicles and alienating Tesla’s customer base.

Last year, Lander called for Tesla shareholders to reject a proposed pay package for Musk, noting in particular that the board of directors failed to address Musk’s overcommitment to multiple companies besides Tesla: X, SpaceX, xAI, Neuralink, and The Boring Company.

The city’s leadership and governance concerns remained during Tesla’s period of substantial growth from 2019 through 2023. However, in less than three months, Tesla stock dropped by almost 40 percent, Lander said. (His comments were made on April 1, before Tesla announced delivery numbers that fell short of expectations and before the precipitous market-wide selloff caused by the tariffs announcements).

“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,” said Lander.

The proposed lawsuit would raise claims under Exchange Act Rule 10b-5 for misrepresentations about the leadership of Tesla. Lander’s press release notes that the five city pension systems filed a shareholder derivative lawsuit against Fox Corporation officers and directors in 2023. The release seems to suggest that the proposed litigation would name both Tesla and its board as defendants.

The pension systems would pursue financial damages and governance changes. Lander prefers these outcomes to divestment because they could restore some of the pensions’ losses, address Tesla’s governance issues, and improve the company’s long-term value. If this fails, however, Lander said the pension systems will consider divesting their over 3 million shares of Tesla.

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