A judge recently ruled that Elon Musk can use Twitter whistleblower Peiter Zatko’s allegations as part of the arguments in his counterclaim against the company. As it turns out, Musk doesn’t just want to use Zatko’s claims to win his case, but also the fact that the former Twitter executive has gotten a settlement to get under the $44 billion acquisition deal he signed with the social network. . As The Washington Post Musk’s attorneys sent a letter to Twitter telling the company that the $7.75 million severance payment it paid to Zatko in June violated a provision in their sales agreement.
In the letter uploaded to the SEC’s website, Musk’s attorneys cited Section 6.1(e) of the merger agreement, stating that Twitter pledged “not to award or provide any termination or termination payments or benefits to any business service provider otherwise other than the payment of severance payments or benefits in the ordinary course of business in accordance with past practice and subject to the execution and non-cancellation of any indemnity claim in favor of the Company and its Subsidiaries.” Former employees are considered service providers of the company.
Musk and Twitter signed the purchase agreement in April and it took until June for Zatko to receive his severance payment. The company did not ask Musk for approval before making the payment or notifying him of the transaction, the lawyers said in the letter. Musk apparently only found out about the settlement when Twitter took the information to court on September 3. As such, Musk’s camp argues that the settlement serves as an additional basis for terminating the parties’ purchase agreement. As The mail notes, it’s now up to Twitter to prove that such a large payout to a former employee was not uncommon. We’ve reached out to Twitter for a statement and will update this post when we hear back.
Also known as “Mudge,” Zatko accused the social network of “extreme, egregious flaws” in security. He said in a complaint filed with the Securities and Exchange Commission that Twitter violated the terms it had agreed to when it settled a privacy dispute with the FTC in 2011. The whistleblower also claimed he was unable to get a direct response from Twitter about the actual number of bots on the website. If you recall that Musk previously accused Twitter of fraud for hiding the actual number of bots on its platform and told the court in a legal filing that 10 percent — not just 5 percent as the social network claims — of its daily active users who see ads are inauthentic accounts.
Twitter and Musk will face each other in court in a five-day trial that starts on October 17.
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