Judge Says Musk Can Include Whistle-Blower Claims in Twitter Case

Twitter’s showdown with Elon Musk will proceed as scheduled, despite Mr. Musk’s attempt to secure a delay, but he can incorporate new information from a whistle-blower that he has argued bolsters his case to abandon his acquisition of Twitter.

On Wednesday, a judge in Delaware Chancery Court ruled that an Oct. 17 court date — in which Mr. Musk and Twitter were set to face off over his $44 billion acquisition of the social media company — would stand.

“I am convinced that even four weeks’ delay would risk further harm to Twitter too great to justify,” Judge Kathaleen McCormick wrote in her ruling.

Mr. Musk charged ahead in April with an agreement to buy Twitter but quickly soured on the deal. Twitter’s board has sued the billionaire to force him to complete the blockbuster deal.

Mr. Musk has cited Twitter’s disclosures about the number of fake accounts on the service as a reason to end the agreement, calling them inaccurate. Last month, a former top security executive at Twitter, Peiter Zatko, came forward with additional claims that the company had lied to regulators and misled the public about its security practices.

Mr. Zatko said in a whistle-blower report released in August that the company had lied to Mr. Musk about the number of fake accounts on its platform and misled the Federal Trade Commission about how it protected users’ privacy. Twitter had fired Mr. Zatko in January.

Lawyers for Mr. Musk argued during a hearing on Tuesday that Twitter had concealed what it knew about Mr. Zatko’s complaints and said they needed more time to investigate. “Doesn’t justice demand a few weeks to be able to look into this?” Alex Spiro, a lawyer for Mr. Musk, asked the court.

Twitter’s lawyers said that Mr. Zatko’s claims were “unsubstantiated” and that Mr. Musk’s team was trying to halt the acquisition by pursuing new theories about the business. “Twitter will be asked to boil the ocean again and again and again,” Bill Savitt, a lawyer for Twitter, said at the hearing.

Twitter has suggested that Mr. Musk’s complaints about bots and spam are a smoke screen, and that his true rationale for abandoning the deal is an economic downturn that reduced his wealth. On Tuesday, lawyers for Twitter presented texts from Mr. Musk to illustrate his concerns about the market slump associated with the war in Ukraine.

“Let’s slow down just a few days,” Mr. Musk texted Michael Grimes, the head of global technology investment banking at Morgan Stanley, on May 8, less than two weeks after he agreed to buy the company. “Putin’s speech tomorrow is really important. It won’t make sense to buy Twitter if we’re heading into World War 3.”

And in June, Mr. Musk traded texts with Bob Steel, a partner at the financial services firm Perella Weinberg, about a potential way to re-price the deal.

Representatives for Morgan Stanley and Perella Weinberg declined to comment.

Judge McCormick said she would not give hints about whether she believed the whistle-blower report had merit. “The world will have to wait for the post-trial decision,” she wrote in her ruling.

Lauren Hirsch contributed reporting.

Source: https://www.nytimes.com/2022/09/07/technology/musk-twitter-whistle-blower.html