Elon Musk has sent a second letter to Twitter declaring the termination of his $44 billion acquisition deal, citing allegations raised by a former Twitter security executive who recently filed a series of whistleblower actions against the media brand.
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In the letter Monday, the Tesla CEO said the whistleblower’s filing invoked “additional bases separate and distinct” from those he raised in his original July 8 letter purportedly nixing the deal, to be retained and considered in the event his initial reasons are dismissed.
Twitter sued Musk in Delaware’s Court of Chancery on July 12, seeking to force the sale’s completion. Chancellor Kathaleen St. Jude McCormick expedited the case, scheduling a five-day trial to begin on Oct. 17.
“For the avoidance of doubt, these bases are in addition to, and not in lieu of, the bases for termination described in the July 8 termination letter,” Musk wrote, noting that he did not believe the additional reasons for termination were necessary but filed the new claims “in the event that the July 8 termination letter is determined to be invalid for any reason.”
On July 6, Peiter “Mudge” Zatko, who was fired as Twitter’s chief security officer in January, filed whistleblower complaints across several government bodies including Congress, the Federal Trade Commission, the U.S. Securities and Exchange Commission and the U.S. Department of Justice. He alleged a wide range of misconduct at the company, all allegedly known to Twitter’s top executives, including CEO Parag Agrawal.
On Aug. 23, Musk announced that his attorneys had subpoenaed the whistleblower. “We have already issued a subpoena for Mr. Zatko, and we found his exit and that of other key employees curious in light of what we have been finding,” Alex Spiro, counsel to Musk, said in an email response to the reports.
Late Monday evening, Musk sent a second termination notice that integrated the whistleblower’s allegations. Musk then filed a notice with the SEC disclosing the second letter, saying those allegations are “likely to have severe consequences for Twitter’s business.”
Among the claims are material noncompliance by Twitter under a 2011 FTC consent decree and “general obligations under data privacy, unfair trade practice, and consumer protection laws and regulations,” the letter Musk filed with the SEC said.
The new termination letter also references claims that Twitter is “uniquely vulnerable to systemic disruption resulting from data center failures or malicious actors, a fact which Twitter leadership (including its CEO) have ignored and sought to obfuscate.”
Musk’s letter echoed Zatko’s complaint claim that Twitter’s platform is built “in significant part” on the infringement and misappropriation of third party intellectual property and that Twitter conceded to Indian government demands that “its agents” be given access to Twitter user information, and in some instances, be hired by the social media giant.
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Source: https://www.law360.com/articles/1525705/musk-adds-whistleblower-claims-to-twitter-deal-break-notice
