July 5, 2022

NO FAIR: Elon Musk unlawfully reneging on Twitter deal, shareholders’ lawsuit alleges

NO FAIR: Elon Musk unlawfully reneging on Twitter deal, shareholders' lawsuit alleges

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It appears the Elon Musk-Twitter saga may be coming to a close with the Tesla CEO announcing he’s backing out of the $44 billion deal. Musk claims that Twitter not only refused to disclose the number of “bots” on the platform – but “actively resisted” his requests.

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This comes almost three weeks after Musk’s announcement on May 17th that the merger was on hold due to Twitter’s lack of transparency about the social media platform’s ratio of fake accounts to active users.

Eight days after announcing the deal was on hold, a class-action suit was filed against Musk, Twitter, and the company’s founder by Twitter shareholders. The suit accused Musk of “making false statements” and engaging in market manipulation of the company’s stock.

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“Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or to re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the Buyout consideration,” the lawsuit asserts.

The suit also refutes Musk’s claims of not knowing about Twitter’s proliferation of bots, alleging that the soon-to-be owner not only waived “due diligence” during negotiations with Twitter but was well aware of the phony accounts.

“At the time, Musk was well aware that Twitter had a certain amount of “fake accounts” and accounts controlled by “bots” and had in fact settled a lawsuit based on the fake accounts for millions of dollars. Musk had tweeted about that issue at Twitter several times in the past, prior to making his offer to acquire Twitter with full knowledge of the bots,” the filing claims.

Referring to an $809.5 million settlement that Twitter entered into in September 2021 after a securities fraud allegation was filed in the Northern California District Court, the suit also states the case was easily available to Musk, as well as being listed on the website twittersecuritieslitigation.com.

It was not only widely publicized, but Twitter founder and then-CEO Jack Dorsey, according to CISION, made a public announcement about it.

Given that Elon Musk is known for being a social media troll, whether his intentions are sincere remains to be seen. Between multiple class-action suits, a $1 billion “breakup” clause, and Twitter’s intention to follow through with the merger, this announcement could very well be just another of Musk’s not-so-subtle attention grabs.

Follow Ty Ross on Twitter @cooltxchick

Ty Ross

News journalist for Washington Press and Occupy Democrats.

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