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There is no way he gets away with it. Matt Levine has again good thread that explains what is what. Must read. https://twitter.com/matt_levine/status/15451514

by nabla9 4y ago

There is no way he gets away with it. Matt Levine has again good thread that explains what is what. Must read. https://twitter.com/matt_levine/status/1545151445057536001 https://twitter.com/matt_levine/status/1545151445057536001

Wowfunhappy 4y ago
I don't understand the distinction Matt Levine is trying to make. He signed an agreement to buy Twitter without doing due diligence first. Isn't that the same thing as waving due diligence?
- nabla9 4y ago
  He is saying >"waived due diligence" and so can't bring up the bots thing is not a reason why he can't bring up the bot thing. He is buying Twitter now. If there is something wrong with the deal, he can sue Twitter CEO's, Goldman Sachs, and some previous shareholders but Twitter is his.
- mikkergp 4y ago
  The way I am currently understanding it, is that I think it's a distinction about the stage of the deal he's in. There would usually be a due diligence phase during negotiations, and then after due diligence they would sign a merger agreement that the purchase was good to go. He could decline due diligence but still be in that prior phase, but they're not in that prior phase. They're in the signed contract phase. I think it's like, you can take a car to a mechanic before you sign a contract to buy a car, or you could write into the contract that you agree x, y and z thing are working in the car and take it to a mechanic afterwards, but he signed the agreement, without taking it to a mechanic and without writing any contingencies into the purchase agreement.
  - elif 4y ago
    In your analogy, I believe lemon laws would apply. You can't just lie about what you're selling and get away with it.
    - mikkergp 4y ago
      Right and I think that is sort of a thing, but it’s an extremely high bar, like I think he would have to prove was lying about actual business financials, not just business metrics.
- resoluteteeth 4y ago
  I think the point is that even if Musk had done normal due diligence it would be irrelevant once the agreement was signed, so his problem isn't having "waived due diligence" it's having signed a binding agreement to buy the company.
  - danielmarkbruce 4y ago
    He isn't bound if Twitter lied in the contract. In the contract, they said their SEC filings are kosher (4.6). If they aren't (and the bot calc being materially off would probably do it), Twitter lied and he isn't bound. Also, if they promise to do something and then don't do it (6.4), he can walk. The termination letter claims both.
    - resoluteteeth 4y ago
      > He isn't bound if Twitter lied in the contract. In the contract, they said their SEC filings are kosher (4.6). If they aren't (and the bot calc being materially off would probably do it), Twitter lied and he isn't bound. What twitter has actually been saying in their filings is stuff like this: > We have performed an internal review of a sample of accounts and estimate that false or spam accounts represented less than 5% of our MAUs. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated. It specifically says they may be wrong and the real number may be higher, so even if their calculation is low that doesn't mean they lied in their filings, so that's not going to get Elon off the hook for the deal.
      - danielmarkbruce 4y ago
        Yep, mostly agree. If the calc is materially off though, I can see a decision potentially going against them. To be clear, to me 7% wouldn't be materially off. 30% would and a reasonable person may decide they must have or should have known the 5% number was misleading. The SEC might, although I'm not sure if them deciding that would be enough.
- yucky 4y ago
  I think the issue is there may be criminal liability on behalf of Twitters officers which negates that, due to them wildly misrepresenting bot numbers on all of their earnings calls. Every single Twitter shareholder could and probably should enter a class action against the officers of Twitter.
danielmarkbruce 4y ago
There is a way. Twitter has rep'd that their SEC filings are filed and materially comply with SEC regs. If the bot number is wildly off, and they knew it (or reasonably should have), then he can walk. I doubt this is the case but it could be.

by nabla9 4y ago

Wowfunhappy 4y ago

I don't understand the distinction Matt Levine is trying to make. He signed an agreement to buy Twitter without doing due diligence first. Isn't that the same thing as waving due diligence?

nabla9 4y ago
He is saying >"waived due diligence" and so can't bring up the bots thing is not a reason why he can't bring up the bot thing. He is buying Twitter now. If there is something wrong with the deal, he can sue Twitter CEO's, Goldman Sachs, and some previous shareholders but Twitter is his.
mikkergp 4y ago
The way I am currently understanding it, is that I think it's a distinction about the stage of the deal he's in. There would usually be a due diligence phase during negotiations, and then after due diligence they would sign a merger agreement that the purchase was good to go. He could decline due diligence but still be in that prior phase, but they're not in that prior phase. They're in the signed contract phase. I think it's like, you can take a car to a mechanic before you sign a contract to buy a car, or you could write into the contract that you agree x, y and z thing are working in the car and take it to a mechanic afterwards, but he signed the agreement, without taking it to a mechanic and without writing any contingencies into the purchase agreement.
- elif 4y ago
  In your analogy, I believe lemon laws would apply. You can't just lie about what you're selling and get away with it.
  - mikkergp 4y ago
    Right and I think that is sort of a thing, but it’s an extremely high bar, like I think he would have to prove was lying about actual business financials, not just business metrics.
resoluteteeth 4y ago
I think the point is that even if Musk had done normal due diligence it would be irrelevant once the agreement was signed, so his problem isn't having "waived due diligence" it's having signed a binding agreement to buy the company.
- danielmarkbruce 4y ago
  He isn't bound if Twitter lied in the contract. In the contract, they said their SEC filings are kosher (4.6). If they aren't (and the bot calc being materially off would probably do it), Twitter lied and he isn't bound. Also, if they promise to do something and then don't do it (6.4), he can walk. The termination letter claims both.
  - resoluteteeth 4y ago
    > He isn't bound if Twitter lied in the contract. In the contract, they said their SEC filings are kosher (4.6). If they aren't (and the bot calc being materially off would probably do it), Twitter lied and he isn't bound. What twitter has actually been saying in their filings is stuff like this: > We have performed an internal review of a sample of accounts and estimate that false or spam accounts represented less than 5% of our MAUs. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated. It specifically says they may be wrong and the real number may be higher, so even if their calculation is low that doesn't mean they lied in their filings, so that's not going to get Elon off the hook for the deal.
    - danielmarkbruce 4y ago
      Yep, mostly agree. If the calc is materially off though, I can see a decision potentially going against them. To be clear, to me 7% wouldn't be materially off. 30% would and a reasonable person may decide they must have or should have known the 5% number was misleading. The SEC might, although I'm not sure if them deciding that would be enough.
yucky 4y ago
I think the issue is there may be criminal liability on behalf of Twitters officers which negates that, due to them wildly misrepresenting bot numbers on all of their earnings calls. Every single Twitter shareholder could and probably should enter a class action against the officers of Twitter.

danielmarkbruce 4y ago

There is a way. Twitter has rep'd that their SEC filings are filed and materially comply with SEC regs. If the bot number is wildly off, and they knew it (or reasonably should have), then he can walk. I doubt this is the case but it could be.