Yahoo by Alexis Keenan 8/9/2022
Tesla (TSLA) CEO Elon Musk raised the stakes in his court battle with Twitter (TWTR) on Friday, filing a counter lawsuit that accuses the social media company of fraud.
“He’s now really doubling down,” University of Iowa corporate and securities law professor Robert Miller says about Musk’s countersuit. “That’s a very strong claim, if true.”
In his countersuit made public on Friday, Musk’s lawyers detailed arguments first made in a July 8 letter to terminate Musk's agreement to acquire Twitter in a $44 billion merger. While legal scholars have noted weaknesses in those early arguments, Musk’s new fraud claims, if proven, could push Twitter into a more challenging defense.
In his new claims, Musk says Twitter defrauded him by minimizing the prevalence of fake or spam accounts on its platform in statements to the U.S. Securities and Exchange Commission. Twitter stands by its estimate that fake or spam accounts comprise fewer than 5% of its mDAUs, or monetizable daily active users, and notes that it reported to the SEC that the actual number could be higher.
Weeks after agreeing on April 25 to acquire Twitter’s outstanding stock at $54.20 per share, Musk posted on Twitter hinting of cold feet. Musk's termination letter followed, accusing Twitter of breaching the deal by withholding the methods it used in its public filings to estimate that less than 5% of its monetizable daily active users are fake accounts.
Twitter claims the bots issue is a pretext for backing out of the deal, and that Musk has torpedoed Twitter stock with a series of disparaging tweets. The social media site is suing to force Musk to go through with the deal.
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https://finance.yahoo.com/news/elon-musk-is-doubling-down-with-fraud-claims-against-twitter-154516063.html
