Elon Musk, co-founder and chief executive officer of Tesla. (Photographer: Carla Gottgens/Bloomberg)

Musk Says BlackRock Makes ‘Excessive Profit’ From Short Lending

(Bloomberg) -- Tesla Chief Executive Officer Elon Musk on Thursday dragged BlackRock Inc. into his long-running dispute with short sellers, alleging the fund manager was reaping heavy profits by lending shares they hold to this group of investors.

The renewed attack began began Thursday night when Musk referred to the Securities and Exchange Commission as the “Shortseller Enrichment Commission.” He revisited one of his own posts from 2012 in which he said short sellers were “often unreasonably maligned” and said that he’s changed his mind in the intervening years. Musk pulled index funds into the argument by saying holders in these funds don’t know their investments are being used to benefit short sellers.

Musk also said there’s “no rational basis” for a long-term holder to lend their stock to short sellers, and that gives them “a strong incentive to attack the company by whatever means possible.”

Ed Sweeney, a representative for BlackRock, initially declined to comment on Friday. Later, Brian Beades, another spokesman for the asset manager, said in an emailed statement that the firm takes “a rigorous approach to managing risk throughout the securities lending process.”

BlackRock’s iShares funds voted earlier this year for a shareholder proposal to have Tesla appoint an independent board chairman, according a regulatory filing. In settlements with the SEC last week, Musk agreed to step down as chairman and the company assented to adding two independent directors.

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