Elon Musk cites whistleblower claims in latest attempt to void Twitter contract

Elon Musk cites whistleblower claims in latest attempt to void Twitter contract
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This illustration shows Elon Musk’s Twitter account on a mobile phone screen with the Twitter logo in the background. A whistleblower’s complaint that Twitter misled federal regulators about the company’s security risks could give Elon Musk fresh ammunition in his bid to fend off a $44 billion takeover of the company.

Sheldon Cooper | Lightrocket | Getty Images

Elon Musk’s legal team filed another notice on Tuesday to rescind the $44 billion deal to buy twittergiving further reasons.

Twitter shares fell more than 1% in premarket trading.

The latest appeals come after Twitter’s former head of security, Peiter “Mudge” Zatko it was claimed earlier this month “extreme, serious deficiencies” in privacy, security and content moderation by the social media firm.

On July 8, Musk’s legal team first filed a notice with the US Securities and Exchange Commission (SEC). Stop buying Twitter. Musk’s legal team claimed that “Twitter is in breach of its contractual obligations.”

A follow-up notice filed with the SEC lists the allegations that Zako made as additional reasons to cancel the deal.

“Allegations of certain facts known to Twitter on and before July 8, 2022, but not disclosed to the Musk Parties up to and including that time, have come to light that provide additional and different grounds for terminating the Merger Agreement.” Musk’s legal representative, Mike Ringler of Skadden, Arps, Slate, Meagher & Flom LLP, wrote a letter to Twitter’s legal chief.

Ringler said in the letter that the final termination notice is “not legally necessary” to complete the merger deal, but is being delivered if the July 8 filing “is determined to be invalid for any reason.”

In a letter issued on Musk’s behalf, Zatko’s complaint alleges “misbehavior at Twitter — all disclosed to Twitter’s directors and senior executives, including (CEO) Parag Agrawal — that could have dire consequences for Twitter’s business.” “.

Musk’s attorney said Zatko is alleging a “material breach” of Twitter’s obligations. 2011 agreement with the Federal Trade Commission. The letter echoes some of Zatko’s other claims, including that Twitter is “exceptionally vulnerable to system disruptions caused by data center failures or malicious actors.”

“These allegations, if true, constitute a breach by Twitter of the following provisions of the Merger Agreement, thereby entitling the Musk Parties to terminate the Merger Agreement in accordance with the terms described in more detail below,” the letter states.

Twitter and Musk will be tested in October. 17 in Delaware Resolve Musk’s attempt to cancel his purchase of the company unless a deal is reached first.

Since proposing to take over Twitter, Musk complained said that the number of spam accounts on the social media platform is higher than those declared to be fake. In a July 8 letter, Musk’s legal team claimed the company “refuses” to release information about those accounts. Tesla CEO.

Ahead of the October trial, Musk’s legal team subpoenaed whistleblower Zatko for information about the company’s spam accounts and alleged security vulnerabilities.

CNBC’s Lora Kolodny contributed to this report.

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