Whistleblower: Musk justifies pulling out of Twitter deal

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Image Source: Vox

Elon Musk continues coming up with new justifications for why he thinks he can back out of his $44 billion deal to acquire Twitter.

Musk’s attorneys criticized Twitter in a letter dated September 9 for its separation agreement with Peiter “Mudge” Zatko, the social media platform’s former head of security who was let go in January. Under this agreement, Twitter had paid severance benefits totaling $7.75 million to Zatko and his legal counsel.

According to Musk’s legal team, that violated a clause of the acquisition agreement wherein Twitter agreed to refrain from granting or providing any severance or termination payments or benefits to any Company Service Provider aside from the payment of severance sums or benefits in the normal course of business consistent with past practice without first receiving Musk’s approval. According to the letter, Twitter’s former workers are included in the definition of “Company Service Provider.”

Twitter did not obtain the defendants’ approval before making this payment, and the defendants were not informed of this payment, according to the letter sent to the SEC on Friday. In actuality, the separation agreement was finally submitted to the court on September 3, 2022, at which point the defendants found out about this payment.

In SEC and FTC filings, Zatko, whom Twitter has described as a disgruntled ex-employee, said that Twitter had concealed, among other issues, “severe, flagrant” privacy and security flaws.

Read Also: Twitter whistleblower raises security concerns 

In a letter sent last month, Musk’s attorneys cited Zatko’s accusations as further proof that the multibillionaire’s agreement to purchase Twitter was invalid. Because the firm, according to Musk, could not back up its claim that spam and false accounts make up less than 5% of active users, he informed Twitter in July that he was terminating the agreement.

In a lawsuit filed in July, Twitter demanded that Musk fulfill his promise to acquire the social media business for $54.20 per share. Musk is the CEO of Tesla and SpaceX. Starting on October 17, a judge in the Delaware Court of Chancery will preside over a five-day trial to hear Twitter’s case against Musk. The judge overseeing the case ruled this week that Musk may include claims from Zatko’s lawsuit in his countersuit, but she rejected Musk’s request to push back the trial’s start date until November.

Musk, who holds the largest holding in Twitter with a 9.6% ownership, was initially excited about the notion of acquiring it and floated concepts like verifying all users’ identities and charging companies to use the social network. However, the legal team for Twitter claims that Musk changed his mind once his personal wealth decreased along with Tesla’s stock price.

A Twitter attorney read aloud a text Musk sent to a Morgan Stanley banker on May 8 regarding the acquisition agreement at a hearing in the Delaware court on Tuesday.

Judge slammed Musk for withholding text messages

Elon Musk received harsh criticism from the judge for failing to properly turn over text conversations that could have been used as evidence in Twitter Inc.’s lawsuit attempting to compel the billionaire to finish his proposed $44 billion takeover of the social media site.

Read Also: Jack Dorsey subpoenaed by Elon Musk 

In a ruling on Wednesday, Delaware Chancery Judge Kathaleen St. Jude McCormick stated that Musk and his attorneys’ responses to Twitter’s request for text messages he and top aide Jared Birchall sent and received regarding the proposed deal and his subsequent attempt to withdraw from it had “glaring deficiencies.” She demanded that the men hand over the texts’ phone records.