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"Twitter has hidden negligent security practices, misled federal regulators about its safety, and failed to properly estimate the number of bots on its platform

"Twitter has hidden negligent security practices, misled federal regulators about its safety, and failed to properly estimate the number of bots on its platform, according to testimony from the company’s former head of security, the legendary hacker-turned-cybersecurity-expert Peiter “Mudge” Zatko." "Zatko was fired by Twitter in January and claims that this was retaliation for his refusal to stay quiet about the company’s vulnerabilities. Last month, he filed a complaint with the Securities and Exchange Commission (SEC) that accuses Twitter of deceiving shareholders and violating an agreement it made with the Federal Trade Commission (FTC) to uphold certain security standards. His complaints, totaling more than 200 pages, were obtained by CNN and The Washington Post and published in redacted form this morning." What a bombshell! Maybe Elon Musk's complaints about Twitter have more merit than anyone expected. What might the SEC and shareholders do in response?

jdhn 4y ago
>What might the SEC and shareholders do in response? If shareholders believe this, they can do a variety of things such as sell the stock (smaller holders), or demand answers from leadership that go beyond "Yeah, we're secure" (bigger holders such as Saudi Arabia).
- mrex 4y ago
  Some options that shareholders would have in the situation where investors were knowingly deceived by false disclosures of a publicly traded company are missing from this response.
  - cj 4y ago
    Namely, the ability for shareholders to sue Twitter.
  - sroussey 4y ago
    Their disclosures are similar to this: we check for bots, use a process, the process could be wrong.
    - mrex 4y ago
      Mudge alleges that their disclosures were a less than good faith attempt to gauge the figure. Mudge also raises a number of allegations not pertaining to bots, including that Twitter has deliberately failed to abide by the terms of a federal consent decree. If proven out, that fact alone would constitute material adverse affect.
philipov 4y ago
His complaints don't hold merit because he entered into a binding agreement to buy Twitter after waiving due diligence rights. Zatko was fired in January. Musk had and waived his chance to discover these things. It's too late now.
- mrex 4y ago
  >waiving due diligence rights Pop legal quiz - does "waving due diligence rights" during an acquisition remove the other party's liability for fraud they've committed against the prospective buyer?
  - zimpenfish 4y ago
    > the other party's liability for fraud What fraud though?
    - mrex 4y ago
      The fraud that Mudge alleges in this article, for instance?
      - KerrAvon 4y ago
        We’re missing the connection to Musk here. Care to enlighten us about your theory?
        deleted 4y ago
        [deleted]
        mrex 4y ago
        There seems to be the impression that "waiving due diligence" in an acquisition is some license for the seller to defraud the potential buyer without recourse. If Mudge's allegations are true that Twitter has been defrauding the public in their reporting, failing to abide by the terms of a federal consent decree, and generally turning a blind eye to real problems to prop up their image, then "waived due diligence" or not, Musk has an out from the acquisition, and cause for a significant tort claim.
zimpenfish 4y ago
> Maybe Elon Musk's complaints about Twitter have more merit than anyone expected. Not the bot complaints, anyway, because "failed to properly estimate the number of bots on its platform" has been covered off by Twitter's consistent "this is how we estimate by sampling, it's a finger in the air guess, could be right, could be miles off, there's no standard methodology for this" stance in their SEC filings since 2013 (which no-one has questioned until now, mind.)
paulpauper 4y ago
What a bombshell! Maybe Elon Musk's complaints about Twitter have more merit than anyone expected. Anything Elon or crypto related is still being spammed heavily with giveaway/impersonation bots. Nothing has changed. The spam/bot problem is as bad now as it has ever been, and likely is worse than assumed, because it includes not just obvious spam accounts, but legit accounts that have been taken over by spammers or repurposed for spamming. So there is a % of accounts which are obvious bots and than another % accounts that exhibit bot-like behavior. Given how much time Elon spends on twitter and his first-hand experience with scammers using his name and spamming his comments, I think his assessment is probably more accurate compared to what twitter is claiming.

jdhn 4y ago

>What might the SEC and shareholders do in response? If shareholders believe this, they can do a variety of things such as sell the stock (smaller holders), or demand answers from leadership that go beyond "Yeah, we're secure" (bigger holders such as Saudi Arabia).

mrex 4y ago
Some options that shareholders would have in the situation where investors were knowingly deceived by false disclosures of a publicly traded company are missing from this response.
- cj 4y ago
  Namely, the ability for shareholders to sue Twitter.
- sroussey 4y ago
  Their disclosures are similar to this: we check for bots, use a process, the process could be wrong.
  - mrex 4y ago
    Mudge alleges that their disclosures were a less than good faith attempt to gauge the figure. Mudge also raises a number of allegations not pertaining to bots, including that Twitter has deliberately failed to abide by the terms of a federal consent decree. If proven out, that fact alone would constitute material adverse affect.

philipov 4y ago

His complaints don't hold merit because he entered into a binding agreement to buy Twitter after waiving due diligence rights. Zatko was fired in January. Musk had and waived his chance to discover these things. It's too late now.

mrex 4y ago
>waiving due diligence rights Pop legal quiz - does "waving due diligence rights" during an acquisition remove the other party's liability for fraud they've committed against the prospective buyer?
- zimpenfish 4y ago
  > the other party's liability for fraud What fraud though?
  - mrex 4y ago
    The fraud that Mudge alleges in this article, for instance?
    - KerrAvon 4y ago
      We’re missing the connection to Musk here. Care to enlighten us about your theory?
      - deleted 4y ago
        [deleted]
      - mrex 4y ago
        There seems to be the impression that "waiving due diligence" in an acquisition is some license for the seller to defraud the potential buyer without recourse. If Mudge's allegations are true that Twitter has been defrauding the public in their reporting, failing to abide by the terms of a federal consent decree, and generally turning a blind eye to real problems to prop up their image, then "waived due diligence" or not, Musk has an out from the acquisition, and cause for a significant tort claim.

zimpenfish 4y ago

> Maybe Elon Musk's complaints about Twitter have more merit than anyone expected. Not the bot complaints, anyway, because "failed to properly estimate the number of bots on its platform" has been covered off by Twitter's consistent "this is how we estimate by sampling, it's a finger in the air guess, could be right, could be miles off, there's no standard methodology for this" stance in their SEC filings since 2013 (which no-one has questioned until now, mind.)

paulpauper 4y ago

What a bombshell! Maybe Elon Musk's complaints about Twitter have more merit than anyone expected. Anything Elon or crypto related is still being spammed heavily with giveaway/impersonation bots. Nothing has changed. The spam/bot problem is as bad now as it has ever been, and likely is worse than assumed, because it includes not just obvious spam accounts, but legit accounts that have been taken over by spammers or repurposed for spamming. So there is a % of accounts which are obvious bots and than another % accounts that exhibit bot-like behavior. Given how much time Elon spends on twitter and his first-hand experience with scammers using his name and spamming his comments, I think his assessment is probably more accurate compared to what twitter is claiming.