Musk Wins Request To Include Whistleblower Claims In Twitter Suit—But Judge Denies Delay
Topline
A Delaware judge ruled Wednesday that the world’s wealthiest man Elon Musk can include claims made by Twitter whistleblower Peiter Zatko in his countersuit justifying his withdrawal from his $44 billion deal to buy the social media company, though the court denied Musk’s request to move back the high-profile trial between Musk and Twitter.
Elon Musk speaking at the conference in Norway last Wednesday
The Key Facts
Musk can amend the countersuit with information shared by Zatko, Twitter’s former cybersecurity chief, in a whistleblower complaint made public last month, Judge Kathaleen McCormick wrote in the five-page order.
Approval was largely expected, though McCormick noted in the order it was not a decision based on the merit of the claims, writing, “The world will have to wait for the post-trial decision.”
Though Musk’s case should be bolstered by including Zatko’s complaint, which backed some of Musk’s concerns including the company misleading investors about the number of fake and spam accounts, Twitter scored a victory of its own Wednesday as McCormick denied Musk’s request to push the trial back to November.
As scheduled, the five-day trial begins October 17.
Alex Spiro, one of Musk’s lawyers, welcomed the ruling in a statement to SME, writing, “We are hopeful that winning the motion to amend takes us one step closer to the truth coming out in that courtroom.”
A Twitter spokesperson declined to comment on Wednesday’s ruling, but wrote in emailed comments the company looks “forward to presenting our case in Court beginning on October 17th and intend to close the transaction on the price and terms agreed upon with Mr. Musk.”
The Crucial Quote
“I am convinced that even four weeks’ delay would risk further harm to Twitter too great to justify,” McCormick wrote in the order.
Big Number
3.6%. That’s how much Twitter’s stock rose in Wednesday morning trading. Twitter shares are trading at $40.05, still far short of Musk’s $54.20 per share purchase price.
Important Background
One of the most-followed users on the platform, Musk frequently railed against the companies’ policies, including its ban of then President Donald Trump in January 2021. Musk disclosed a 9.1% stake in Twitter in April and Twitter accepted Musk’s unsolicited bid to take the company private later that month. In July, Musk submitted paperwork to cancel the agreement. He claimed that Twitter was not being truthful regarding the amount of spam and fake accounts it had allowed on its platform. Twitter soon thereafter sued Musk in Delaware’s Court of Chancery, looking to force the deal to go through on the agreed-to conditions. Zatko alleged that Twitter pursued a policy of “deliberate ignorance” in tracking bots on the site, also accusing the company of committing numerous “egregious” security violations.
SME Valuation
Musk, the richest person in the world at $256.5 billion is our estimate. Musk’s wealth comes mostly from his stakes in Tesla and SpaceX, each of which he leads as CEO.
Additional Reading
Musk Cites Whistleblower Concerns in New Filing To Cancel The Twitter DealSME)
Elon Musk Subpoenas Twitter WhistleblowerSME)
Twitter Whistleblower – Here are the Claims of Former Security Chief Peiter Zatko (SME)
