Musk Cites Whistleblower as New Reason to Exit Twitter Deal
In a filing with the U.S. Securities and Exchange Commission, Elon Musk said his legal team notified Twitter of "additional bases" for ending the deal on top of the ones given in the original termination notice issued in July.
August 30, 2022 at 02:14 PM
3 minute read
Technology Media and TelecomTesla CEO Elon Musk and Twitter lobbed more accusations at each other in the latest round of legal filings over Musk's efforts to rescind his offer to buy the social media platform.
Musk filed more paperwork in his bid to terminate the deal, this time based on information in a whistleblower complaint filed by Twitter's former head of security.
Twitter fired back by saying Musk's attempt to back out is "invalid and wrongful."
In a filing with the U.S. Securities and Exchange Commission, Musk said his legal team notified Twitter of "additional bases" for ending the deal on top of the ones given in the original termination notice issued in July.
Twitter has sued Musk, asking the Delaware Chancery Court to force him to go through with the $44 billion deal. A high-stakes trial is set to start the week of Oct. 17.
In a letter to Twitter Inc., which was included in the filing, Musk's advisers cited the whistleblower report by former executive Peiter Zatko, also known by his hacker handle "Mudge."
Zatko, who served as Twitter's head of security until he was fired early this year, alleged in his complaint to U.S. officials that the company misled regulators about its poor cybersecurity defenses and its negligence in attempting to root out fake accounts that spread disinformation.
The Musk letter, addressed to Twitter's Chief Legal Officer Vijaya Gadde, said Zatko's allegations provide extra reasons to end the deal if the July termination notice "is determined to be invalid for any reason."
Billionaire Musk has spent months alleging that the company he agreed to acquire undercounted its fake and spam accounts, which means he doesn't have to go through with the deal.
In a separate SEC filing, Twitter responded to what it called Musk's latest "purported termination," saying it's "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."
Zatko received a subpoena Saturday from Musk's team compelling him to testify in what Zatko's lawyers emphasized would be an "involuntary" deposition ahead of the coming courtroom battle between Twitter and Musk.
"He did not make his whistleblower disclosures to the appropriate governmental bodies to benefit Musk or to harm Twitter, but rather to protect the American public and Twitter shareholders," Zatko's lawyers wrote in a prepared statement.
Twitter is likely to amend its lawsuit to include Zatko's allegations, so the court can decide on both the bot and cybersecurity issues. That could delay the trial because Musk will say he needs more time to prepare, said Brian Quinn, a law professor at Boston College.
The court will have to decide whether the bot or cybersecurity issues are a "material adverse effect" that will harm Twitter's business for years, a difficult legal bar to clear, Quinn said.
The bot issue, which Twitter disclosed in filings with the SEC, seems to be an issue that Twitter would win on, Quinn said. Cybersecurity problems raised by Zatko may not be such an easy victory, he said.
"This is more grist for the mill," Quinn said. "It's not as obvious for the most part that this is a winner for Twitter. But once you start to analyze these closely, it's still an uphill battle for Musk."
Kelvin Chan and Tom Krisher report for the Associated Press. AP writer Matt O'Brien contributed to this report.
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllData Breach Lawsuit Against Byte Federal Among 1,500 Targeting Companies in 2024
4 minute readState Attorney General Faces Federal Courtroom Test Over Crypto Mining Ban
4 minute readFTC Receiver Eyes Fraudulent Messages Ecommerce Company's Clients
Trending Stories
- 1'It's Not Going to Be Pretty': PayPal, Capital One Face Novel Class Actions Over 'Poaching' Commissions Owed Influencers
- 211th Circuit Rejects Trump's Emergency Request as DOJ Prepares to Release Special Counsel's Final Report
- 3Supreme Court Takes Up Challenge to ACA Task Force
- 4'Tragedy of Unspeakable Proportions:' Could Edison, DWP, Face Lawsuits Over LA Wildfires?
- 5Meta Pulls Plug on DEI Programs
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250