Elon Musk cites whistleblower claims in latest effort to cancel Twitter deal

Elon Musk cites whistleblower claims in latest effort to cancel Twitter deal
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In this illustration, Elon Musk’s Twitter account is displayed on a mobile phone screen with the Twitter logo in the background. A whistleblower’s allegation that Twitter misled federal regulators about the company’s security risks could provide Elon Musk with new ammunition in his bid to avoid buying the company for $44 billion.

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Elon Musk’s legal team filed another notice Tuesday to terminate his $44 billion purchase agreement. Twitterciting additional reasons.

Shares of Twitter fell more than 1% in premarket trading.

The latest filings come after former Twitter security chief Peiter “Mudge” Zatko alleged earlier this month “Extreme and egregious shortcomings” of the social media firm related to privacy, security and content moderation.

On July 8, Musk’s legal team initially filed a notice with the US Securities and Exchange Commission (SEC). terminate the acquisition of Twitter. Musk’s legal team argued that “Twitter has failed to meet its contractual obligations.”

The follow-up notice, disclosed to the SEC, cites the allegations made by Zatko as additional reasons to terminate the deal.

“The allegations about certain facts, known to Twitter prior to July 8, 2022, but not disclosed to the Musk parties before and at that time, have since come to light and provide additional and distinct grounds for terminating the Settlement Agreement. Fusion”. Mike Ringler, Musk’s legal representative from Skadden, Arps, Slate, Meagher & Flom LLP, wrote in a letter to Twitter’s legal chief.

Ringler said in the letter that the latest termination notice is “not legally required” to finalize the merger agreement, but is delivered in the event the July 8 filing is “determined to be invalid for any reason.”

The letter on Musk’s behalf said that Zatko’s complaint “alleges wide-ranging misconduct on Twitter, all of which was disclosed to Twitter’s directors and senior executives, including (CEO) Parag Agrawal, likely to have serious consequences for Twitter business.

Musk’s attorney said Zatko alleges that Twitter is in “material breach” of its obligations under him. 2011 agreement with the Federal Trade Commission. The letter exposed some of Zatko’s other accusations, including claims that Twitter is “uniquely vulnerable to systemic outage resulting from data center failures or malicious actors,” something senior management knew but “ignored and tried to ignore.” obfuscate”.

“These allegations, if true, demonstrate that Twitter has breached the following provisions of the Merger Agreement, giving the Musk Parties the right to terminate the Merger Agreement in accordance with its terms, as more fully described below: “, the letter said.

Twitter did not immediately respond to a request for comment.

Twitter and Musk will go to trial on October 1. 17 in Del. to resolve Musk’s attempt to cancel his acquisition of the company unless they come to an agreement first.

Since he proposed the acquisition of Twitter, Musk has complained that the number of fake or spam accounts on the social media platform is higher than reported. In the July 8 letter, Musk’s legal team claimed that the company “failed or refused to provide” information about these accounts to the company. Tesla CEO.

Before the October trial, Musk’s legal team subpoenaed whistleblower Zatko, seeking information about the company’s spam accounts and their alleged security vulnerabilities.

CNBC’s Lora Kolodny contributed to this report.

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