Elon Musk’s lawyers told Twitter on Monday that the recent whistle-blower report by Pieter Zatko (known popularly as Mudge), Twitter’s former security chief, could provide additional reasons for Musk to walk away from his $44 billion acquisition agreement.
The lawyers’ letter to Twitter, revealed in a regulatory filing on Tuesday, could be a precursor to the billionaire seeking to incorporate Zatko’s allegations in his arguments for a coming trial over whether Musk must complete the purchase.
In a related development, Musk’s lawyers disclosed in a court filing Monday that they had subpoenaed Zatko.
The subpoena is one of more than 100 that lawyers for Musk and Twitter have issued ahead of the trial, scheduled for October.
Zatko has accused Twitter of years of “material misrepresentation and omissions” about security and privacy protections built into its platform. Twitter executives have strongly rejected Zatko’s claims.
Musk has said that Twitter’s public disclosures about the number of fake accounts on the platform — which he relied upon when he agreed to purchase the company — were misleading, and were the basis of his initial rationale for walking away from the deal, expressed in a letter to Twitter in July.
The latest letter suggests that Musk may seek permission from the Delaware Chancery Court, which is overseeing the legal dispute, to amend his countersuit against Twitter.
It would be up to the judge overseeing the trial, Kathaleen St. J. McCormick, to allow him to do so.
In the letter, Musk’s lawyers write that Zatko’s allegations, if true, constitute a “material adverse effect” on the company, allowing Musk to break the agreement.
The deal requires Twitter to comply with federal laws, and Zatko has accused it of being in breach of a 2011 consent decree with the Federal Trade Commission over its security practices.
This would have “existential” consequences for Twitter’s business, according to the letter.
The letter also said that Twitter should have disclosed security weaknesses raised by Zatko in its documents filed with the Securities and Exchange Commission.
