Elon Musk’s lawyers move to amend suit following whistleblower complaint


Elon Musk has filed a motion to amend his lawsuit against Twitter and extend the trial schedule following the publication of new allegations from a company whistleblower.

The details of the motion were submitted to a Delaware court under seal and not publicly available. But Musk’s lawyers have signaled that they intend to use the new allegations as ammunition for their arguments, citing them during a hearing last week and subpoenaing the whistleblower, Peiter Zatko, for a deposition.

The filing became public after Musk’s lawyers sent a letter to Twitter, dated Monday, that pointed to the allegations from the company’s former head of security, asserting that if the claims are true, Twitter has breached the merger agreement. The whistleblower complaint was first reported by The Washington Post and CNN last week.

The embattled deal has been taken to court in Delaware after Musk originally filed to end his $44 billion deal to buy Twitter in July, saying Twitter hadn’t given him enough information about the company’s business. Twitter then sued Musk to finish the deal. A trial is scheduled for October.

Former security chief claims Twitter buried ‘egregious deficiencies’

In revelations reported by The Post last week, Zatko, also known as Mudge, alleged that the company has “extreme, egregious deficiencies” in its security practices. Zatko alleged that Twitter violated the terms of a settlement agreement with the Federal Trade Commission by falsely claiming that it had a solid security plan.

Twitter has pushed back on Zatko’s allegations, saying last week that they appeared to be “riddled with inaccuracies.” The company filed a document with the Securities and Exchange Commission acknowledging it had received the letter.

In a response to Musk’s lawyers, Twitter reiterated that it intends to move forward with the deal and says that Musk’s new termination letter is “based solely on statements made by a third party that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context.”

Musk’s lawyers called the letter to Twitter an “additional termination notice” in case its first notice was found invalid.

Musk’s team cites the FTC settlement, Twitter’s allegedly lax security and other allegations made in Zatko’s complaint as reasons to end the deal.

“The Zatko Complaint alleges far-reaching misconduct at Twitter — all of which was disclosed to Twitter’s directors and senior executives, including Parag Agrawal — that is likely to have severe consequences for Twitter’s business,” Musk’s lawyers wrote in the letter to Twitter, referring to the company’s CEO.

New whistleblower allegations could factor into Twitter vs. Musk trial

In a filing that became public Monday, Musk’s legal team subpoenaed Zatko to appear next month for a deposition in the ongoing lawsuit.

The saga between Musk and Twitter began earlier this year, when the billionaire revealed he had taken a large stake in the company and launched a hostile takeover attempt to buy it. Twitter first seemed to push back against the offer, but eventually the company agreed to a deal that would pay $54.20 per share.

Musk, who has more than 104 million followers on Twitter, has long used the site to make announcements about his companies Tesla and SpaceX, share memes, and extol his opinions. He initially said he wanted to ensure that Twitter promoted free speech online.

But the deal soon became rocky. His offer came around a time when the tech-heavy Nasdaq went through a steep decline. It became apparent that not only had Musk lost billions of dollars, but that he might be overpaying for Twitter by billions of dollars as well.

Eventually, Musk publicly raised concerns that Twitter had misled him about the number of bots and fake accounts on the site. Twitter has pushed back on these allegations, and said it has provided Musk with sufficient company information.

Musk filed to back out of the deal in July, leading to Twitter’s lawsuit and a countersuit from Musk. The case is being considered in the Delaware Court of Chancery, which hears many corporate matters including mergers and acquisitions.

Legal experts have said it will be difficult for Musk to walk away from the Twitter deal with no financial consequences.

Twitter is still marching forward with the deal, and shareholders are scheduled to vote on it next month.

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