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When you have a CEO as powerful as Elon Musk, whose larger-than-life presence is inarguably responsible for a sizable chunk of Tesla's gargantuan market cap, rules related to corporate governance and the separation of power inevitably take a back seat. One such instance of Elon Musk's alleged misuse of Tesla's resources is now coming back to haunt him, replete with a full-fledged investigation by the SEC and the office of the Attorney General (AG) for the Southern District of New York (SDNY).
For the benefit of those who might not be aware, the Wall Street Journal disclosed back in July that, as part of the endeavor to construct a lavish glass house for Elon Musk under the auspices of the so-called Project 42, Tesla's resources were used to procure specialized glass worth millions of dollars. In addition, Tesla employees were commissioned to work on the project in secrecy. These developments then prompted a full-fledged investigation from Tesla's board of directors to determine whether the company's resources had been misappropriated and what role, if any, Musk himself played in the saga.
Now, the Wall Street Journal is again reporting that the allegations of misappropriation of Tesla's resources were serious enough to invite an ongoing investigation by federal prosecutors in Manhattan working under the Department of Justice and the office of the AG for the Southern District of New York.
In addition, the SEC has also opened a civil investigation into Project 42 and is demanding additional pertinent information from Tesla.
If the $TSLA board investigation of Musk's alleged embezzlement exonerated him, the results would have released it and given it to the Southern District prosecutors and we never would have heard about this case again.
He's guilty as f'ing sin.
— Stanphyl Capital (@StanphylCap) August 30, 2023
This brings us to the crux of the matter. While the results of the internal investigation conducted by Tesla's board have not been made public, we can reasonably infer that it did not deliver an all-clear signal to Elon Musk. After all, the eventuality would have been sufficient to halt any external investigation by the regulators.
https://twitter.com/rschmied/status/1696993455556493345
As part of Tesla's code of ethics, senior officials are obligated to notify material violations of the law. Now, in light of the onslaught of scrutiny from regulators, some people are reasonably inferring whether the departure of Zachary Kirkhorn, the company's erstwhile CFO, had anything to do with Project 42.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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