Ex-Twitter CEO reveals DOJ probe in pursuit of legal fees
Twitter’s former chief executive revealed the U.S. Justice Department and Securities and Exchange Commission investigated the social-media platform in the past as part of his effort to force the company to cover legal fees related to lawsuits and government investigations.
Parag Agrawal, ousted last year by new owner Elon Musk, and other former executives said in a Delaware Chancery Court lawsuit Monday that they’ve spent more than $1 million on lawyers in connection with the inquiries and shareholder lawsuits over their management of the San Francisco company.
Agrawal said in the complaint his lawyer was contacted by representatives of the Justice Department late in 2022 “regarding certain investigations related to the company.” He didn’t elaborate. The New York Times had reported on the lawsuit earlier.
Elon Musk completed his $44-billion acquisition of Twitter Inc., according to people familiar with the matter, putting the world’s richest man in charge of the struggling social network after six months of public and legal wrangling over the deal.
Musk had been contacted earlier in 2022 by the SEC and the Federal Trade Commission over his initial disclosure of acquiring a major stake in Twitter. The billionaire’s lawyers sought to limit disclosures of the contacts with the government, citing confidentiality rules around communications with attorneys.
Twitter’s former managers say in their suit that their lawyers have sent repeated letters to Twitter’s attorneys outlining the legal expenses they’ve racked up, but the company is violating its own bylaws by “refusing to advance” money to cover their expenses, according to the 20-page complaint filed Monday.
“There can be no legitimate dispute that my clients are involved in these proceedings by reason of the fact each was an officer of the company, and therefore the company is obligated to advance the expenses we have submitted,” Dave Anderson, a lawyer for the former Twitter managers, said in a March 23 letter to the platform’s attorneys. Anderson is with Sidley Austin in Chicago.
Representatives of Twitter didn’t respond to an email seeking comment on the suit. Other executives demanding Twitter advance legal fees include Vijaya Gadde, its former top lawyer and Ned Segal, Twitter’ onetime chief financial officer
Twitter is facing several investor suits over the fallout from Musk’s purchase of the platform for $44 billion last year after his failed effort to get out of the deal. It’s also facing suits by other former Twitter employees who say they were wrongfully denied promised stock grants after getting laid off.
Following mass layoffs at Twitter, outgoing employees are readying various legal claims against new CEO Elon Musk.
Over the last year, Musk has launched a massive cost-cutting effort at Twitter, laying off thousands of workers and refusing to pay leases negotiated by former managers. The billionaire faces more than $1.5 billion in debt payments this year over the acquisition as advertising revenue has plummeted.
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