Justice Department Recently Looked Into Twitter, Lawsuit Says

A lawsuit filed on Monday by a number of former Twitter executives mentioned they’d personally spent greater than $1 million on authorized bills associated to shareholder lawsuits and a number of other authorities investigations, together with an inquiry by the Justice Division.

The character of the Justice Division inquiry, and whether or not it’s lively, was unclear. The lawsuit, filed in Delaware Chancery Courtroom, didn’t supply different particulars.

Final yr, the Securities and Trade Fee started investigating Elon Musk’s purchases of Twitter shares and whether or not they have been correctly disclosed. Twitter can be beneath investigation by the Federal Trade Commission, which is scrutinizing the corporate’s privateness practices.

The Justice Division has aided the F.T.C. with previous investigations into Twitter. In 2022, the company joined the F.T.C. in a $150 million fine in opposition to Twitter over deceptive customers about the way it handled their private knowledge. The Justice Division additionally typically assists the S.E.C. in prison investigations.

Mr. Musk didn’t reply to a request for remark. A spokesperson for the Justice Division didn’t reply to a request for remark.

Twitter is dealing with shareholder lawsuits associated to Mr. Musk’s acquisition, together with one which named its former govt officers. And a kind of executives was subpoenaed to seem earlier than Congress, in a listening to that addressed Twitter’s content material moderation insurance policies.

The executives who filed the go well with embrace Parag Agrawal, Twitter’s former chief govt; Ned Segal, its onetime chief monetary officer; and Vijaya Gadde, who was its head of authorized and coverage.

Mr. Musk, who purchased Twitter in late October, fired the executives on the day he took management of the corporate. They notified Twitter of the bills greater than two months in the past, however the firm has not paid, based on the lawsuit.

Since shopping for Twitter for $44 billion, Mr. Musk has aggressively minimize prices, partly to pay the debt he took on to fund the acquisition. The loans have left Twitter with about $1.5 billion in debt funds a yr, whereas advertising revenue at the company has fallen about 50 percent, the billionaire informed a banker convention final month.

Later in March, he informed staff in an e-mail seen by The New York Instances that he valued Twitter at $20 billion, lower than half what he paid for it.

Twitter has eradicated greater than 75 % of its 7,500 staff and has been accused of refusing to pay payments owed to distributors, suppliers and landlords. The corporate can be accused of lacking funds to software program providers, janitorial contractors and actual property administration corporations, resulting in a bunch of lawsuits.

Mr. Musk fired Mr. Agrawal, Ms. Gadde and Mr. Segal, in addition to Twitter’s common counsel, Sean Edgett, “for cause” and refused to pay the executives tens of hundreds of thousands of {dollars} in compensation and severance. Mr. Edgett will not be a part of Monday’s lawsuit.

Mr. Agrawal and Mr. Segal have racked up authorized bills responding to inquiries from the Justice Division and the S.E.C. throughout and after Mr. Musk’s acquisition, based on their lawsuit. Federal authorities contacted them round July, whereas they have been nonetheless employed by the corporate, the grievance mentioned, with the S.E.C. asking Mr. Agrawal in September to protect paperwork. The Justice Division contacted Mr. Agrawal and Mr. Segal’s legal professionals “later in 2022.”

They’re additionally named, together with Ms. Gadde, in a shareholder lawsuit. Ms. Gadde incurred authorized charges associated to her February testimony earlier than the House Committee on Oversight and Accountability, which targeted on the corporate’s resolution to briefly limit a 2020 New York Post story about contents from Hunter Biden’s laptop.

Twitter’s company bylaws and its contracts with the previous executives require the corporate to pay their authorized charges for issues associated to the corporate, the lawsuit mentioned.

“As soon as once more, Twitter has did not honor its contractual obligations to pay its payments,” Aaron Zamost, a spokesman for Mr. Segal and Ms. Gadde, mentioned in an announcement.