Musk’s Public Feud With Trump Risks Breaking Texas Fiduciary Law

Elon Musk didn’t just suggest that President Donald Trump should be impeached. He went further, using his personal social media platform to insinuate, without evidence, that the president may have ties to the Jeffrey Epstein scandal.

Musk later deleted the accusation after he was rebutted by David Schoen—Epstein’s former attorney—who stated unequivocally that Trump “never did anything wrong with Jeffrey Epstein.”

However, Musk had already amplified this narrative loudly, repeatedly, and intentionally. And he did it while serving as the CEO of Tesla Inc.—a publicly traded company whose shareholders are once again watching its value erode, thanks to Musk’s personal impulses.

Setting aside the schoolyard name-calling, the main story here isn’t about government but governance, because what Musk is doing may be a textbook breach of fiduciary duty under Texas corporate law, where Tesla is now incorporated.

Musk’s actions raise one of the fundamental questions at the heart of modern corporate law: Can a controlling shareholder or CEO (Musk is both) repeatedly hijack a multibillion-dollar public company to wage personal political crusades—regardless of the cost to the shareholders he’s supposed to protect?

And just as urgently: Where is the board of directors, and why aren’t they stepping in to uphold their own fiduciary duty to oversee and restrain such misconduct?

Public, Personal Vendetta

While it is tempting to dismiss these posts as more of Musk’s usual provocations, they carry consequences far beyond his personal brand.

Tesla stock slid fast in the wake of Musk’s most aggressive anti-Trump attacks. That’s no coincidence; Musk’s actions not only alienate large segments of consumers and institutional investors, but also risk entangling Tesla in political and legal blowback that has nothing to do with electric vehicles.

Worse still, Musk’s posture is steeped in hypocrisy. Trump wasn’t a vocal champion of electric vehicles—he even tried to eliminate the EV tax credit—but Tesla nonetheless thrived during his administration. The company benefited from a deregulatory climate, hands-off oversight, and a geopolitical environment that allowed Musk to expand Tesla’s global footprint with minimal interference.

At one point, Trump even welcomed Musk’s gleaming red Teslas to the White House lawn, giving him a literal stage to show off his vision of the future. Musk took full advantage of that moment and the broader policy windfall—then turned on the politician who helped provide it.

This isn’t a corporate strategy. It’s a personal vendetta. And Tesla shareholders are paying the price.

Texas Law

Musk famously moved Tesla’s incorporation from Delaware to Texas in 2024, following a court ruling that struck down his $56 billion compensation package. At the time, Musk framed Texas as a more business-friendly environment.

But business-friendly doesn’t mean lawless, and Texas corporate law still imposes clear fiduciary duties on officers, directors, and controlling shareholders—including duties of loyalty, care, and obedience.

Those duties don’t disappear when the controlling shareholder-CEO is a celebrity. If anything, they become more important. Under Texas law, officers must act in the best interests of the corporation, not in service to their personal grievances or grudges.

The argument that Musk is opposing Trump to protect Tesla’s long-term position—because Trump might cut EV subsidies—doesn’t hold water. If policy concerns were the issue, there are a hundred less damaging ways for a CEO to advocate for industry interests.

What Musk is doing isn’t strategic corporate advocacy. It’s a series of reckless, personal, and incendiary attacks that drag Tesla into the headlines for all the wrong reasons.

If Texas’ new business courts are serious about enforcing fiduciary standards—especially when self-interest or bad faith by corporate leadership is evident—the board of directors can’t look the other way.

Allowing the CEO to publicly smear a political rival on a personal platform while the company suffers fallout should trigger heightened scrutiny of the board’s oversight and accountability.

The Board’s Duty

Tesla’s board, too, has a role to play. Under Texas law, directors can’t sit passively while a CEO endangers the corporation’s reputation and value through disloyal conduct. At minimum, the board must:

• Publicly clarify that Musk’s political statements don’t reflect Tesla’s position
• Investigate whether corporate resources are being used to amplify Musk’s agenda on X
• Evaluate and implement governance reforms that insulate the company from Musk’s extracurricular activities

By failing to do so, Tesla’s board risks crossing the line from negligent oversight into affirmative abdication—a breach of its own fiduciary obligations. This is especially true because this isn’t Musk’s first detour into ego-driven chaos.

From the “funding secured” tweet to the chaotic X acquisition, Musk has repeatedly forced Tesla investors to absorb the financial and reputational costs of his personal decisions. His behavior isn’t just bad optics. It’s becoming a case study in how personal power can metastasize into corporate liability.

However, Tesla recently raised the derivative action threshold to 3% ownership—a move critics say is designed to further insulate Musk and the board from shareholder lawsuits challenging breaches of fiduciary duty.

Texas’ Move

Musk’s unchecked crusade against Trump has already cost Tesla shareholders. But if Texas corporate law is going to mean anything, it must mean billionaires aren’t above basic fiduciary standards.

No CEO—no matter how brilliant or powerful—gets a free pass to sabotage shareholder value for the sake of personal politics. Not in Delaware. Not in Texas. Not anywhere.

Tesla’s board should act, and Texas courts may need to follow before Musk’s tweets set a new precedent. In corporate law, loyalty to the company isn’t a personal preference. It is a binding fiduciary duty.

Loyalty to shareholders isn’t optional. It’s the job. And when a CEO treats it like a hobby, courts need to remind him—in plain and simple terms—that corporate governance isn’t a game.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Anat Alon-Beck is associate professor at Case Western Reserve University Law School.

Mark Goldfeder is CEO and director of the National Jewish Advocacy Center.

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