San Francisco Frontiers - Musk cites whistleblower in new filing to scrap Twitter deal

In their filing to the Securities and Exchange Commission, Musk's lawyers said the information recently provided by whistleblower Peiter Zatko illustrated "far-reaching misconduct at Twitter... that is likely to have severe consequences for Twitter's business."

Musk, who has sought repeatedly to pull out of the $44 billion agreement to purchase the social media giant, has formally subpoenaed Zatko to have him share information about spam accounts and data protection shortcomings at Twitter.

The Tesla boss hopes allegations made by Zatko will bolster his case. According to court documents released Monday, Zatko was ordered to answer questions on the record for Musk lawyers on September 9.

The claims by Zatko have been sent to two US regulators as well as the Department of Justice.

Zatko claims Twitter misled users and regulators about "extreme, egregious" security gaps.

In a letter to Twitter's general counsel included in the SEC filing, Musk lawyer Mike Ringler wrote that allegations about certain facts known to Twitter prior to July 8 but undisclosed to Musk "have since come to light that provide additional and distinct bases to terminate the Merger Agreement."

Ringler added that the new elements are not necessary to justify a termination of the deal, but constitute additional arguments "in the event that the July 8 Termination Notice is determined to be invalid for any reason."

In early July, Musk announced he was breaking the buyout agreement with Twitter's board of directors, accusing the company of not living up to its commitments by not disclosing the exact number of inauthentic and spam accounts.

The move prompted Twitter to sue the billionaire entrepreneur to force him to honor the terms of the agreement.

A trial, which is scheduled to last five days, will begin on October 17 in a special court in Delaware.

Musk's attempt to back out of buying Twitter has struggled for momentum in court.

Twitter won some early battles in the case, including a fast-track trial date, and its stock had risen as analysts predicted the platform would prevail over the mercurial Musk.

But a US judge last week told Twitter to surrender more data to Musk on the key issue of fake accounts, and the billionaire hopes Zatko's whistleblower complaint could further turn the tide in its favor.

According to Dan Ives of Wedbush Securities, Zatko's accusations, just weeks away from trial, are "a huge potential win for Musk which could complicate the Twitter case."

I.Wright--SFF