$7 million payment to Twitter whistleblowers violates purchase agreement, Musk lawyers say
A judge recently ruled that Elon Musk can use Twitter whistleblower Peiter Zatko's allegations as part of arguments in his countersuit against the company. Ultimately, Musk intends to use not only Zatko's claims to win his lawsuit, but also the fact that the former Twitter executive received a settlement to walk out of the deal to acquire Twitter. 44 billion dollars that he concluded with the social network. As reported by The Washington Post, Musk's lawyers sent a letter to Twitter, telling the company that the severance package worth $7.75 million that she paid to Zatko in June violated a provision of their sales agreement.
In the letter uploaded to the SEC website, Musk's attorneys cited section 6.1(e) of the merger agreement, which states that Twitter has agreed not to "grant or provide severance or termination benefits or benefits to any Company service provider other than the payment of severance or benefits in the normal course of business consistent with past practice and subject to the execution and non-revocation of a discharge of claims in favor of the Company and its Subsidiaries.” Former employees are considered service providers of the company.
Musk and Twitter reached the purchase agreement in April, and it wasn't until June that Zatko received his severance package. The company did not seek Musk's consent before making the payment or notifying him of the transaction, the attorneys said in the letter. Musk apparently only found out about the settlement when Twitter included the information in its court filing 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 Post notes, it's now up to Twitter to prove that such a large payout to a former employee wasn't out of the ordinary. We've reached out to Twitter for a statement, and we'll update this post when we get back to you.
Also known as "Mudge", Zatko accused the social network of having "extreme and glaring deficiencies" in security. He said in a complaint filed with the Securities and Exchange Commission that Twitter violated terms agreed upon when settling a privacy dispute with the FTC in 2011. The whistleblower also claimed he could not not get a direct answer from Twitter regarding the actual number of bots on the website. If you recall, Musk previously accused Twitter of fraud for hiding the true number of bots on its platform and told the court in a legal filing that 10% — and not just 5% as the social network claims — of its daily active users who see the ads are inauthentic accounts.
Twitter and Musk are set to face off in court in a five-day trial set to begin October 17.
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A judge recently ruled that Elon Musk can use Twitter whistleblower Peiter Zatko's allegations as part of arguments in his countersuit against the company. Ultimately, Musk intends to use not only Zatko's claims to win his lawsuit, but also the fact that the former Twitter executive received a settlement to walk out of the deal to acquire Twitter. 44 billion dollars that he concluded with the social network. As reported by The Washington Post, Musk's lawyers sent a letter to Twitter, telling the company that the severance package worth $7.75 million that she paid to Zatko in June violated a provision of their sales agreement.
In the letter uploaded to the SEC website, Musk's attorneys cited section 6.1(e) of the merger agreement, which states that Twitter has agreed not to "grant or provide severance or termination benefits or benefits to any Company service provider other than the payment of severance or benefits in the normal course of business consistent with past practice and subject to the execution and non-revocation of a discharge of claims in favor of the Company and its Subsidiaries.” Former employees are considered service providers of the company.
Musk and Twitter reached the purchase agreement in April, and it wasn't until June that Zatko received his severance package. The company did not seek Musk's consent before making the payment or notifying him of the transaction, the attorneys said in the letter. Musk apparently only found out about the settlement when Twitter included the information in its court filing 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 Post notes, it's now up to Twitter to prove that such a large payout to a former employee wasn't out of the ordinary. We've reached out to Twitter for a statement, and we'll update this post when we get back to you.
Also known as "Mudge", Zatko accused the social network of having "extreme and glaring deficiencies" in security. He said in a complaint filed with the Securities and Exchange Commission that Twitter violated terms agreed upon when settling a privacy dispute with the FTC in 2011. The whistleblower also claimed he could not not get a direct answer from Twitter regarding the actual number of bots on the website. If you recall, Musk previously accused Twitter of fraud for hiding the true number of bots on its platform and told the court in a legal filing that 10% — and not just 5% as the social network claims — of its daily active users who see the ads are inauthentic accounts.
Twitter and Musk are set to face off in court in a five-day trial set to begin October 17.
All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you purchase something through one of these links, we may earn an affiliate commission. All prices correct at time of publication.
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