A lawsuit filed Monday by several former Twitter executives said they personally spent more than $1 million in legal fees related to shareholder lawsuits and several government investigations, including an investigation by the Justice Department.
The nature of the Justice Department’s investigation and whether it is active was unclear. The lawsuit, filed in the Delaware Chancery Court, offered no other details.
Last year, the Securities and Exchange Commission began an investigation into Elon Musk’s purchases of Twitter stock and whether they had been properly disclosed. Twitter is also under investigation by the Federal Trade Commission, which is scrutinizing the company’s privacy practices.
The Justice Department has helped the FTC with previous investigations into Twitter. In 2022, the agency joined the FTC in a $150 million fine against Twitter for misleading users about how it handled their personal information. The Justice Department also frequently assists the SEC in criminal investigations.
Mr Musk did not respond to a request for comment. A Justice Department spokesman did not respond to a request for comment.
On Elon Musk’s Twitter
- To change the Twitter experience: Nearly six months after buying Twitter, Elon Musk has made tweaks that have changed what people see and interact with on the platform.
- Targeting Substack: After the newsletter service announced it was building a Twitter competitor, Twitter took steps to prevent Substack newsletters from circulating on its platform.
- Senior Lawyer Resigns: Christian Dowell, who had risen to the top of Twitter’s legal department, became the latest in a string of executives to leave the company since Musk took over.
- A new label for NPR: Twitter added a label to the public radio network’s account on the platform, labeled “U.S. state media.” NPR denounced the move as “unacceptable”.
Twitter is facing shareholder lawsuits related to its acquisition of Mr. Musk, including a lawsuit naming the former executives. And one of those executives was subpoenaed to appear before Congress at a hearing on Twitter’s moderation policy.
The executives who filed the lawsuit include Parag Agrawal, the former CEO of Twitter; Ned Segal, former chief financial officer; and Vijaya Gadde, who was the head of legal affairs and policy.
Mr Musk, who bought Twitter at the end of October, fired the executives the day he took control of the company. They notified Twitter of the expenses more than two months ago, but the company has not paid, according to the lawsuit.
Since buying Twitter for $44 billion, Mr. Musk aggressively cut costs, in part to pay off the debt he took on to fund the acquisition. The loans have left Twitter with about $1.5 billion in debt payments a year, while ad revenue at the company is down about 50 percent, the billionaire told a banking conference last month.
Later in March, he told employees in an email seen by The New York Times that he valued Twitter at $20 billion, less than half of what he paid for it.
Twitter has laid off more than 75 percent of its 7,500 employees and is accused of refusing to pay bills owed to vendors, suppliers and landlords. The company is also accused of missing out on payments to software services, concierge contractors and property management companies, leading to numerous lawsuits.
Mr. Musk fired Mr. Agrawal, Ms. Gadde and Mr. Segal, as well as Twitter’s general counsel Sean Edgett, “for good reason” and refused to pay the executives tens of millions of dollars in compensation and severance pay. Mr Edgett is not part of Monday’s trial.
Mr. Agrawal and Mr. Segal incurred legal costs in responding to questions from the Justice Department and SEC during and after Mr Musk’s takeover, according to their lawsuit. Federal authorities contacted them around July while they were still employed by the company, the complaint said, with the SEC asking Mr Agrawal in September to retain records. The Justice Department contacted Mr Agrawal and Mr Segal’s lawyers “later in 2022”.
They are also mentioned, along with Ms. Gadde, in a shareholder lawsuit. Ms. Gadde incurred legal fees in connection with her testimony in February before the House Committee on Oversight and Accountability, which focused on the company’s decision to release a 2020 New York Post story about the contents of the company’s laptop. Hunter Biden briefly.
Under Twitter’s bylaws and contracts with the former executives, the company must pay their legal fees on matters related to the company, the lawsuit said.
“Again, Twitter has failed to meet its contractual obligations to pay its bills,” Aaron Zamost, a spokesman for Mr Segal and Ms Gadde, said in a statement.
