Elon Musk is being investigated by the federal government amid his on-again-off-again bid with Twitter.
via People:
In a Delaware court filing dated Oct. 6, Twitter asked to see communications between the Tesla founder, 51, and federal agents. The papers were unsealed Thursday, according to Bloomberg.
“Elon Musk is presently under investigation by federal authorities for his conduct in connection with the acquisition of Twitter,” lawyers from Potter Anderson Corroon LLP representing the social media platform said, per the outlet.
They added, “Through counsel, he has exchanged substantive correspondence with those authorities concerning their investigations. Twitter wants those documents, because they bear upon key issues in this litigation.”
Twitter added that it had been asking for the correspondence for months to no avail and now wants a judge to intervene, Reuters reported.
Last month, Musks’ legal team issued a “privilege log” of papers to be withheld in discovery. It included email drafts to the U.S. Securities and Exchange Commission as well as a presentation to the Federal Trade Commission, Twitter alleged, per Reuters. “This game of ‘hide the ball’ must end,” the filing reportedly said.
Also on Oct. 6, the judge stopped proceedings that would let the company and Musk finalize their deal, the outlet said.
In April, Twitter shareholder Marc Bain Rasella claimed investors lost out on gains because Musk waited too long to declare his 9.2 percent stake purchase in the platform, Bloomberg reported.
The SEC also questioned why he intended to be a passive shareholder, according to Reuters. He then reportedly refiled as an active investor.
In a statement to PEOPLE, his lawyer Alex Spiro says, “Twitter’s executives are under federal investigation. This misdirection was sent by Twitter to try and uncover which of their assorted misconduct they are under investigation for.”
The investigation into Musk marks the latest in a months-long back-and-forth between the company and the billionaire businessman, who announced his plans to back out of his agreement to buy Twitter back in July.
The announcement came after Musk sent a letter to Twitter, according to Bloomberg and The New York Times. The outlets reported that in the letter, he proposed to acquire the platform at the original price he agreed to pay for the company in April: $44 billion at $54.20 per share.
According to a source familiar with the matter, Bloomberg reported that Musk made the move after his legal team sensed he would lose if the case ultimately went to trial.
Trading on Twitter’s stock was halted shortly after as reports of the proposed deal drove up the company’s share price by nearly 13%, according to The Guardian.
Twitter launched the lawsuit against Musk, hoping to “compel” him to follow through with the acquisition.
In court documents obtained by PEOPLE in July, Twitter claimed Musk acted in “bad faith” after reaching a deal to buy the social media platform.
“In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done,” Twitter said in the complaint, filed in the Delaware Court of Chancery in July. “Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” it continued.
“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the company claimed.
Days before the lawsuit was launched, Musk ended his deal to buy the company, alleging that Twitter was in “breach of multiple provisions” of an original agreement.
Musk claimed that Twitter did not provide enough information about the number of fake accounts and bots on its network and didn’t give his team sufficient data to do their own investigation. These allegations, which Twitter denied, were reiterated in Musk’s countersuit.
Whatever happens, Elon will be just fine.
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