In a letter filed with the SEC [SEE HERE], Tesla CEO Elon Musk is threatening to walk away from the agreement to purchase the social media platform Twitter, if the company does not provide transparency on their internal analysis surrounding fake Twitter accounts.
The letter was sent to Twitter and filed with the SEC after Twitter seemingly refused to provide details about how they can verify the accurate number of active user accounts. There is a strong possibility the purchase is now less likely. The full transcript of the letter is below:
[SEC Filing] – Dear Ms. Gadde: We are in receipt of correspondence sent on Twitter’s behalf dated June 1, 2022, responding to Mr. Musk’s request for the data and information described in my letters dated May 25, 2022 and May 31, 2022.
Mr. Musk does not agree with the characterizations in Twitter’s June 1 letter. Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company’s platform.
Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk’s data requests. Twitter’s effort to characterize it otherwise is merely an attempt to obfuscate and confuse the issue. Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so.
As noted, under various terms of the merger agreement, Twitter is required to provide data and information that Mr. Musk requests in connection with the consummation of the transaction. Twitter’s obligations to provide Mr. Musk with information is not, as the company’s June 1 letter suggests, limited to a “very specific purpose: facilitating the closing of the transaction.” To the contrary, Mr. Musk is entitled to seek, and Twitter is obligated to provide, information and data for, inter alia, “any reasonable business purpose related to the consummation of the transaction” (Section 6.4).
Twitter must also provide reasonable cooperation in connection with Mr. Musk’s efforts to secure the debt financing necessary to consummate the transaction, including by providing information “reasonably requested” by Mr. Musk (Section 6.11). Mr. Musk’s requests for user data not only satisfies both criteria, but also meets even Twitter’s narrowed interpretation of the merger agreement, as this information is necessary to facilitate the closing of the transaction.
As Twitter’s prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base. In any event, Mr. Musk is not required to explain his rationale for requesting the data, nor submit to the new conditions the company has attempted to impose on his contractual right to the requested data. At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Mr. Musk’s own analysis of that data will uncover.
If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates. As noted in our previous correspondence, Mr. Musk will of course comply with the restrictions provided under Section 6.4, including by ensuring that anyone reviewing the data is bound by a non-disclosure agreement, and Mr. Musk will not retain or otherwise use any competitively sensitive information if the transaction is not consummated.
Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement. This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.” (LINK)
Twitter CEO Parag Agrawal has said the company has consistently estimated that fewer than 5% of Twitter accounts are fake. Twitter has disclosed its bot estimates to the U.S. Securities and Exchange Commission for years. However, they also caution their estimate might be too low.
The Twitter sale agreement allows Elon Musk to get out of the deal if there is a “material adverse effect” caused by the company. The agreement defines those terms as a change that negatively affects Twitter’s business or financial conditions. Overall, this looks to be a legal issue that will be determined through litigation.
Twitter has a compelling interest against disclosure and transparency, if in the actual number of bots or fake accounts is substantially above their previous estimates. Prior filings with the SEC claimed a particular standard, if that standard is inaccurate by design or flawed analysis, all prior SEC filings by Twitter could be deemed false and subject the company to fines and/or shareholder lawsuits.
It will be interesting to keep watching this play out…
Sunlight is the best disinfectant.
If Musk walks, Twitter DIES.
Advertisers will DEMAND THEIR MONEY BACK OR OUTRIGHT WALK AWAY- as the User Base NUMBER IS WHY MUSK WALKS.
THE USER BASE will LOSE THE POLITICAL PULL and GLAMOR if MUSK WALKS and Twitter becomes the MODERN DAY MYSPACE (And MYSPACE STILL EXISTS!)
In all cases… Twitter DIES a SLOW DEATH BY EACH FAKE ACCOUNT.
So folks get the Popcorn and ENJOY THE SHOW!
If Elon walks I’m not getting back on.
I doubt I’m the only one that wants to see Twitster made an honest platform.
None of the alternatives are global in nature, and I value that more than an echo chamber or social club.
Well, if you do decide to leave TWATTER… Truth Social is there!
Much more interesting. Many less people.
Decent beginning though. Looking forward to upcoming truth bombs.
I’m not having any fun on ‘Truth’ yet. Maybe it will get better. I’m giving it a chance.
Try following Gregg Phillips from True the Vote. And KanekoaTheGreat.
@greggphillips
@Kanekoa
Also, Telegram.
As I understand it Truth Social banned for life Dr Sherri Tenpenny!
Take that for what you will. I won’t be joining TS if this is how it rolls…
https://freedomfirstnetwork.com/2022/06/donald-trumps-truth-social-bans-dr-sherri-tenpenny-heres-the-reason-why
I wonder if Sundance schooled Musk about the unprofitability of Twitter without there being some SiliconDaddy or GovDaddy.
Musk thinks about it an finds there have got to be significantly more fake accounts.
He goes all-in with his offer knowing he’s going to catch three Aces on the Flop in so far as if Twitter provides the legit info He doesn’t purchase at his orig. price — Market value tanks. And, if Twitter does not provide the info same.
This never would have happened so swiftly without Elon Musk.
Twitter is toast.
Never play poker with Elon, as he went to the same school that The Donald attended.
Couldn’t happen to a “nicer” bunch.
Who do they think they are censoring and then banning the American President?
Twatter is more like it.
I said this was going to play out like this 2 months ago. Musk is a very astute person, surrounded by actual bright individuals.
Either way Musk wins. Fyi, Tesla stock price will rebound in due course like the rest of the market.
“Skadden, Arp, Meaher, and Flom.” If your last name is unpronounceable or just plain dumb, pair up with other like-minded misfits and become a lawyer! 🤡
Dewey, Cheetum, and Howe aren’t hard to pronounce, just impossible to afford.
I miss Robin Williams. He’s where I heard that first.
The Three Stooges did it in the 1930’s. Nyuk nyuk nyuk!
Cheatem, Hook, and Crook…
Someone handed me a business card one time, said:
Ben Dover and C. Howitt Fields
Attorneys
It’s amazing (and not surprising) to see how the mainstream media covers this. They paint a picture of Elon being a whack job and one who is not playing fair.
To put this in perspective, when I buy a house I hire an inspector who looks for problems. If problems are found, the seller fixes them or reduces the price we originally agreed on. Seems fair to me. Elon is simply applying the same principle to the Twitter deal.
Richest man on the planet? ……..sure he’s a whack job (wink wink!)
And there are the cars, homes etc. that are sold ‘as is’ at a mutually agreed upon price.
p.s.
em did not look to make a purchase based on that arrangement,
but, could re-consider … or not (over time).
p.s
maybe t w wants to improve its reputation?
maybe t w hopes that the media allies can protect its (prior) reputation?
maybe t w does not like its ego messed with… ? (guess whom started messing with people, etc. with their selective censorships… )
maybe t w like$ money?
maybe t w likes control?
maybe t w fears truth?
maybe some people do not appreciate selective censorships? hmmm…
p.s.
its interesting that someone admits 5% fake accounts.
Where is the proof, the accounting, of what they admit?
hmmm…
Did anyone ask the question, 5+ years ago?
hmmm…
they need more time to remove all their bot code.
This should not be hard, everything in democrat world is based on illusion. Accurately, SD has been recently asserting posits of it regarding the “pretending” aspect of what is accepted these days as truth. Given that, all the social media providers charge advertisers based upon how many “eye balls” they have on their platform, so it doesn’t take an MBA to figure out that the higher the number, the more you charge. Back to democrat world, it’s real if you say it’s real. Given that, Elon is forcing them to disclose what is real. Of course they won’t, the advertisers won’t care since those advertising companies are fellow travelers in their new Metaverse, which is the best one yet. Elon should walk away, but not yet as he seems to be having fun with this.
Harvard man,Cramer, did his expert legal analysis and conclusively decided that EM has no legal leg to stand on. I will stay on the sidelines and have a good feeling that EM certainly has the right to make sure that twtr isn’t comprised of 20- 40 % of bots. If it comes even close to those #s let all the lawsuits begin. Hard to root for evil twitter. Pray and pray more
Texas Attorney General Paxton Launches Investigation Against Twitter For Potential False Reporting Over Its Fake “Bot” Accounts
Rut roh…
Again, Elon has check-mated as he did with his offer: they knew it was too high.
With this, they can refuse and be bankrupted by shareholder and Elon’s lawsuits or they can provide the information and be bankrupted by shareholder and Elon’s lawsuits. 🤷♂️
Texas Attorney General Ken Paxton has launched an investigation against “Twitter for potentially deceiving Texas consumers” as well as Texas businesses, over fake bot accounts on the platform.
This comes after Elon Musk’s attorney filed a letter saying that the $44 billion acquirement deal could be on the rocks if Twitter doesn’t reveal the number of fake accounts on the platform.
Paxton released the information about the investigation that Twitter is in violation of the Texas Deceptive Trade Practices Act, saying “Twitter has received intense scrutiny in recent weeks over claiming in its financial regulatory filings that fewer than 5% of all users are bots, when they may in fact comprise as much as 20% or more. The difference could dramatically affect the cost to Texas consumers and businesses who transact with Twitter.
“To address this concern, Attorney General Paxton issued a Civil Investigative Demand (CID) to investigate whether Twitter’s reporting on real versus fake users is ‘false, misleading, or deceptive’ under the Texas Deceptive Trade Practices Act. The CID requires Twitter to turn over documents related to how it calculates and manages its user data and how these numbers relate to Twitter’s advertising businesses. Twitter has until June 27 to respond to Attorney General Paxton’s Demand.”
To play this out, here is what seems likely to happen. Twitter refuses to provide the required info, Musk withdraws his offer. The stock tanks to single-digit levels. Twitter sues Musk for specific performance of the purchase agreement. Briefs are filed and its not clear Twitter can win, and more than likely they will lose based on fraud, misrepresentation, bad faith. Elon then offers to buy at, say, $20/share. The Board accepts, but still faces shareholder litigation for the fraud, misrepresentation etc., that led to artificially high (fake) share price. A settlement is reached with class action counsel for what remained of the D & O liability insurance, giving each plaintiff $0.02 on the dollar. Further personal lawsuits are filed against the Twitter Directors, resulting in further settlements but not much. Twitter becomes privately held by Musk and friends. The end.
Yup, see my reply to the comment above this.
Or . . . instead of Elon buying it at $20/share, Blackrock steps in and buys it instead. End of problem for a lot of people in the long run.
You can get D&O to cover fraud?? I would be very surprised to hear that as my D&O doesn’t. It covers the association, but it doesn’t cover ME.
This is an excellent point that I skipped over in my attempt to summarize. You are certainly correct that D&O won’t cover intentional acts like fraud. I was assuming that fraud would not actually be proved because the parties would settle to avoid prolonged litigation. In that instance, the insurer may be persuaded to step in to offer coverage for non-fraud related litigation costs alleged against the Directors, like breach of contract. I have seen this in a couple situations. The insurer doesn’t want to be sued either, and settlements for substantially less than costs of litigation are not uncommon. But again you make an excellent point that I should at least have mentioned.
Twitter is a sewer. Always has been. But it’s where the corporate media gets their “news”.
The CIA owns Twitter and does not want to release the information showing they created the bots and control their use. IMO, Musk is NOT going to buy this CIA operated mess to have them pull the rug out from under him and cost him billions and embarrass him nationally.
Musk is no dummy. He can destroy Twitter and start his own site from scratch if he desires, but I think his objective is to put Twitter out of business so other sites can fill the void. I don’t think he is interested in owning any site like Twitter. He just wants to further free speech.
Oh, FJB and FCIA.
Musk has plainly repeatedly stated this purchase IS NOT ABOUT ECONOMICS.
what DO YOU THINK he MEANT by that statement?
protip: Elon does not own any offshore shell companies, is NOT beholden to any wallstreet or hedge fund or soverign wealth fundie. He has been targeted for years by the SEC.
Does anyone really have to be confused about why he might be interested in exposing twitter?
spoiler: it’s not about twitter. It’s about the dirty rotten bastards who are behind twitter (and other orgs) that are trying to rob him and his company of power.
And if Elon is successful at obtaining Twitter even cheaper (which I believe he will because the BOD has gone out to far – remember they rejected his attempt to purchase and even activated a poison pill before they accepted) he’ll make good use of the opportunity.
Twitter has a real, albeit, inflated user base. Elon buying it will give it credibility over the current BOD (hint: CEO Pag, or whatever his name is, prob won’t get his firing bonus because of the fraud 😂😂) and he’ll spring off that base to do something pretty good.
Well played Elon.
“…so other sites can fill the void.” Indeed. If TW goes under, TruthSocial gets rockets.
I would have thought the advertisers would be able to monitor the return on their investments a lot better. If I was buying these huge chunks of data and only receiving a small fraction of response in return, because a large portion of it was fake, that purchasing would end quickly.
Musk says she’s thinking of buying Twitter and a price skyrockets, musk says he’s having second thoughts and the price plummets.
I wish I knew what musk was going to do then I would be able to call the winning horse, oh wait musk knows what he’s going to do.
So, Twitter may end up paying Musk $1 Billion, then facing lawsuits from shareholders, then an investigation by the SEC and finally a lawsuit from the advertisers they defrauded.
There won’t be enough popcorn for this!
I think I figured out one way TWTR falsely claims active accounts – I was booted from TWTR for mildly expressing myself and refused to beg for forgiveness. So my account is locked. TWTR has at least monthly sent me emails trying to get me to log back on (of course I would have to beg for forgiveness first). This has been going on for over a year and a half. I think TWTR still counts my account as active, when in fact it is most definitely inactive.
That’s behavior training! Same with the dogs & biscuits for peeing outside. Don’t take a shot and get fired.
Twitter is doing the same with me! They locked my account until I remove a post regarding the Covid VAX causing recently (Vaxxed) people to shed the VAX spike protein and contaminating the Unvaccinated people near them, who have never given consent to the shot! I refused to remove it, but Twitter keeps on sending me emails to come to see what some of the people I follow are posting! You try to see the posts, but Twitter takes you to your locked account, and you need to remove the Twitter targeted post before you can see the posts from people you follow! Over my dead body will I remove the truth from my posts! Twitter is no longer important enough to me to sacrifice the truth! So, I too am being counted as active even though I can not use the account. That is where the Twitter fraud is, their quoted number of active users is bogus!!!
Twitter is the Western IC’s sledgehammer of narrative engineering. That won’t change, even if the stock price goes to zero. And they are not surrendering it for a measly $40B, either. Twitter’s ostensible public ownership is a façade to hide it’s real purpose.
https://www.takimag.com/article/the-death-of-free-speech/
Remember when AOL was the world’s supplier of free “floppy disks?” (Bonus points for any millennial who even knows what a ‘floppy disk’ is!”) Well, it turns out that AOL was counting every disk that they mailed out as a subscriber.
It is said that when Ted Turner found out about this at a board meeting, a “justifiable homicide” almost happened then and there. 🤡
Because, no matter what you may think about Ted or any of his many companies, “their customers existed.” You could be sure of that.
I think that both Mr. Musk and (billionaire businessman …) Mr. Trump now realize that “all-powerful social media” companies have been perpetrating more-or-less the exact same fraud. And that their entire house-of-cards – including their entire claim to “world-and game-changing political influence” – is standing on that fraud.
However, at this point at least, they are far too worldly and experienced to do something so crass as to accuse them. Instead, they are applying force majeur 💰 to cause them to reveal and then to hang themselves.
“Bishop to King’s Knight six. Check.” Memo to self: “Do not play Chess with these men.”
(And if you’ve ever wondered how these men “got so damned rich without breaking laws or selling their souls to the Devil,” now you know.) 🤡
Oops. I guess their little secret is out of the closet for all to see.
Disingenuous would be understating it.
Elon has them right where he wants them, Between a rock and a hard place.
Let Twitter die. 🤷♀️
Destroy Twitter by exposing Twitter false practices to it’s advertisers!
Does Musk want and/or need to buy twitter? I get the feeling he couldn’t care less if he owns it. Instead, I see someone bent on exposing the deceptions and hypocrisy held deep within twitter, with the intent of making the world a better place. If he happens to wind up owning the thing after the dust settles then so be it. In the meantime he’s like a cat playing with a mouse, batting that thing around for his own enjoyment while going about the process of removing a disease spreading little rodent from our midst.
🤷♀️
The deal won’t go through. Twitter, like all of Big Tech, is a covert arm of the Deep State. Neither party, i.e. Twitter or Deep State, want this connection exposed, so the deal won’t go through.
It seems as if Elon Musk’s goal of bringing free speech to Twit will be killed.
quelle surprise
It seems as if Elon Musk’ goal of free speech on Twit will be successfully killed.
quelle surprise
Musk knew he could take down Twitter without ever owning it because he understands how important facts are in business. That’s why Trump encouraged Elon to purchase it because he knew Twitter could never recover from what Musk would discover.
Gadde and Agrawal are good at manipulating but this time they are dead to rights. This is going to be fun to watch unfold.
I would presume it’s easy to identify all the bots by regularly requiring all accounts to type in those funny letters and numbers and/or click on the photos thing. Isn’t that what prevents bots on most other websites?
It certainly seems that the effort to eliminate Elon Musk’s goal to establish free speech at Twitt will succeed.