As Musk gains influence, questions arise about US investigations into his empire

Written by Mike Spector, Rachel Levy, Marissa Taylor, and Chris Prentice

NEW YORK/WASHINGTON (Reuters) – Last month, in the final days of the Biden administration, the Securities and Exchange Commission set a tight deadline of several days to require Elon Musk to pay a settlement or face civil charges related to alleged securities violations during his $44 billion fortune. Twitter acquisition in 2022

Musk announced the news himself on a social media post: “Gary, how could you do this to me?” He wrote in reference to SEC Chairman Gary Gensler.

He added a smiley face emoji, but attached a legal letter condemning the “inappropriately motivated” ultimatum: “We demand to know who directed these actions — whether you or the White House.”

A spokesman for the Securities and Exchange Commission declined to comment on the incident. The White House did not respond to a request for comment.

The SEC is not the only investigative agency that Musk has challenged and accused of political harassment. The billionaire has long objected to government oversight, and has portrayed himself as a victim of bureaucratic bigots who stifle his companies’ potentially life-saving innovations.

The White House will soon be occupied by Donald Trump — whom Musk spent more than a quarter of a billion dollars to help elect — instead of Joe Biden, who appointed Gensler. Trump has already appointed a new SEC chairman to replace Gensler, who intends to resign when Trump is inaugurated.

The possibility of Musk gaining unusual influence with the new administration raises questions about the fate of federal investigations and regulatory actions affecting his business empire, at least 20 of which are still ongoing, according to three sources familiar with the operations of SpaceX and Tesla (NASDAQ:) The companies’ interaction with the government United States, as well as five current and former officials with direct knowledge of individual investigations into Musk’s companies.

Investigations include examining alleged securities violations; Questions about the safety of Tesla’s Autopilot and Full Self-Driving (FSD) systems; potential animal welfare violations in brain chip experiments conducted by Neuralink; and alleged pollution and discrimination problems in hiring and licensing at SpaceX.

Musk, Tesla, SpaceX and Neuralink did not respond to requests for comment. Before the election, Musk posted: “I never asked (Trump) for any favors, and he never did me any favors.”

A Trump transition campaign spokesman described Musk as a “brilliant” businessman and said the Trump administration would ensure law and order and “treat all Americans equally.”

Current and former US officials said Musk-related cases could be weakened or dropped by agencies and department heads appointed by Trump.

For example, Trump’s Justice Department is selecting lawyers who have defended him in criminal and impeachment trials and a nominee for FBI chief whom Musk has vocally supported and who has repeatedly pledged to go after Trump’s enemies, one current and three former Justice Department officials said.

Lower-level Justice Department officials could also exercise prosecutorial discretion to avoid aggressively pursuing Musk’s companies in light of his relationship with Trump, said Barbara McQuaid, a former U.S. attorney in Detroit during the Obama administration who also served as a federal prosecutor during the George W. Bush administration. The Bush and Clinton administrations. “As much as they want to please their boss, I think they know how to do it.”

Some legal experts downplayed the risk of political interference by Musk, noting that the lack of progress in the investigation may indicate insufficient evidence.

It’s also possible that prosecutors who believe they have strong cases will move forward regardless of Musk’s role, legal experts said.

“I don’t think there’s much risk of Musk creeping in to influence cases,” said Robert Frenchman, a defense attorney at Dynamis in New York. “Most prosecutors bring cases they think they can win.”

Representatives of the Justice Department and all departments and agencies with pending investigations into Musk or his companies did not comment on the investigations or their ability to enforce regulations against Trump’s allies during his second term. The EPA and the National Highway Traffic Safety Administration (NHTSA) said they will continue to fulfill their legal and regulatory responsibilities.

“first friend”

Since the election, Musk has called himself Trump’s “number one friend,” frequenting Trump’s Mar-a-Lago club in Florida, sharing Thanksgiving with the president-elect’s family, and commenting publicly on his Cabinet appointments.

Trump appointed Musk to co-lead the new Government Efficiency Administration, a private entity that advises on cutting budgets and regulations. It is still unclear what authority this role will carry.

Musk has touted its newfound effect and given specific examples of how to use it. Before the election, Musk said he would seek to use his position as chief efficiency officer to strengthen national regulations on self-driving vehicles that are sure to benefit Tesla and remove “irrational” rules like the one that led to a pollution fine against SpaceX.

NHTSA officials have repeatedly scrutinized Tesla for nearly a decade, at times angering Musk. During one call in 2016, he shouted obscenities at regulators who launched the first of several investigations into Tesla’s automated driver-assistance system after a fatal crash, according to two people familiar with the matter. There are currently five ongoing and open National Highway Traffic Safety Administration (NHTSA) investigations covering driver-assistance technology and other operations in Tesla vehicles.

Tesla blamed Tesla drivers for defending itself against lawsuits and investigations over crashes involving FSD and Autopilot, saying it warned drivers to pay attention.

The Justice Department’s investigation into whether Tesla and Musk overstated their vehicles’ self-driving capabilities is among those where investigators have faced challenges. Prosecutors have difficulty proving that Musk and Tesla crossed a line from legal salesmanship to intentionally making false claims that misled investors and harmed consumers. A person familiar with the investigation said the investigation was halted before the election, partly due to legal hurdles.

Another investigation, conducted by the US Attorney’s Office in Manhattan, concerns the driving range of Tesla vehicles, and came on the heels of a Reuters investigation, which concluded that the automaker rigged dashboard displays to give drivers “rosy” expectations about how many miles they could drive. With battery. power. It is not clear how far the investigation has progressed.

“To our knowledge, no government agency in any ongoing investigation has found any wrongdoing,” Tesla said in its quarterly filings with the Securities and Exchange Commission.

Reuters was first to report that some of Trump’s auto policy advisers have recommended eliminating a requirement that automakers report data on crashes involving automated driving systems, a move that could cripple the NHTSA’s ability to investigate and regulate the safety of the emerging technology.

Rockets and NASA

SpaceX already faces little regulatory scrutiny because the government has outsourced much of its space missions to Musk’s rocket and satellite company, according to former SpaceX officials and a current government official familiar with the company’s interactions with NASA, the Environmental Protection Agency and the FAA. Administration (FAA).

During the September summit, Musk called the EPA’s investigation “crazy,” which led to SpaceX agreeing to a proposed $148,378 fine for dumping contaminants, which Musk said was actually “drinking water.”

The FAA separately in September proposed fining SpaceX $633,000 for allegedly failing to follow licensing requirements and not getting approval for changes during two launches in 2023.

Musk called on FAA Chairman Mike Whitaker to resign in September, shortly after the FAA fined SpaceX and postponed one of the launches. Whitaker said last month that he would step down before Trump’s term.

The Wall Street Journal reported in October that Musk was in regular contact with Russian President Vladimir Putin. Three sources familiar with SpaceX’s government interactions said any scrutiny of Musk’s communications with a US adversary would be unlikely under Trump, who has chosen tech billionaire Jared Isaacman to run NASA. Isaacman has funded and joined two private space missions involving SpaceX.

NASA declined to comment, and Isaacman and a media representative for Isaacman did not respond to a request for comment.

Musk did not respond to requests for comment regarding his alleged contacts with Putin. On one occasion, he responded with two laughing and crying emojis to a social media post on X suggesting that Musk’s critics were trying to paint him as a Russian agent.