by Tom Hals
WILmington, Dell (Reuters) – Billionaire Elon Musk has accused Twitter Inc (NYSE:) from fraud by concealing serious flaws in the social media company’s data security, which the entrepreneur said should allow him to terminate his $44 billion deal for the company, according to a court filing Thursday.
Musk, the world’s richest person, amended his earlier lawsuit to adopt allegations from a Twitter whistleblower, who on Tuesday told Congress of interference with the influential social media platform by foreign agents.
The CEO of electric car maker Tesla (NASDAQ: Inc) also alleged that Twitter hid from him that it was not in compliance with a 2011 agreement with the Federal Trade Commission regarding user data.
“Needless to say, the most recent finding undeniably makes clear that Musk parties have the full right to depart from the merger agreement – for numerous and independently sufficient reasons,” the amended counterclaim read.
Twitter said in a statement it was looking forward to the five-day trial, which is scheduled to begin on October 17 in Delaware. “Mr Musk’s allegations are factually inaccurate, legally insufficient and commercially irrelevant,” the company said.
Musk said the allegations of the whistleblower, former Twitter security chief Peter “Mudge” Zatko, amounted to fraud and a breach of contract by Twitter.
Musk has asked a Delaware judge to find out that he is under no obligation to close the deal while Twitter wants the judge to order Musk to buy the company for $54.20 per share.
Twitter shares closed 0.6% higher Thursday at $42.14.
Twitter said it conducted an internal investigation into Zatko’s allegations and determined they lacked merit. The company said Zatco was fired for poor performance.
Twitter’s attorneys said in court that the whistleblower’s allegations that Musk entered his case were either not grounds for terminating the deal agreement or failed to meet the fraud standard.