David Faber Predicts Elon Musk Could Go to Jail for Bailing on Twitter Purchase
David Faber suggests that Elon Musk could be facing jail time over the lawsuit he is facing as a result of his decision to back out of buying Twitter.
Musk is Facing a $1 Billion Fine
Under the terms of the agreement, Musk agreed to pay $1 billion if he backs out. But Twitter could still seek to hold Musk to his original deal or get a bigger payout by suing him for walking away if they dispute that his reasoning should let him out of the contract.
On the CNBC program, Squawk on the Street, Faber joined his co-hosts, Jim Cramer and Carl Quintanilla as they led a discussion regarding Musk cancelling his $44 billion deal to buy the social media platform
Musk has repeatedly expressed concerns that Twitter is being misled about the number of bots and spam accounts on the platform. The billionaire Tesla CEO has not presented any evidence to support his claims, and some experts have speculated they are merely a pretext for him to back out of a deal he now sees as overpriced.
Bret Taylor, the chairman of Twitter announced the company would take legal action to close the buyout transaction Musk initially agreed to, though the Tesla CEO continues to scoff at any consequences that may result from his attempt to abandon the deal.
Musk Tweeted the Following In Response to the Media Uproar
— Elon Musk (@elonmusk) July 11, 2022
Faber focused Musk’s claims that Twitter is being misled about the extent of bots and spam accounts on the platform.
“There has been no evidence presented thus far in any way to enhance” Musk’s accusations, and now Musk will have to produce evidence in court to prove those claims about Twitter’s supposed lack of transparency, said Faber.
“Even if you were to prove that there were a higher number of bots, you still have to prove that it actually is a material adverse effect,” Faber said.
“I don’t think it is,” Cramer said. “He spent a lot of time, and his team has spent a lot of time with management going over very strong periods of open store, meaning that Musk really felt that they had gotten a really good look at it. So that is going to hold against them. I still think the likelihood that they get some sort of price cut is good. Boy, the board is in trouble if they just get that walk away.”
Faber countered there was “no way” Twitter was going to let that happen as they ask the Delaware Court of Chancery to enforce the terms of Musk’s agreement.
Most of the people that you speak with — or at least, certainly that I have — believe that will be the case. Then the question is: you are forcing Mr. Musk to buy the company, does he actually agree to do it? There is this argument being said lately that, well, maybe he will not comply with that. Then we would have a situation where they could put him in jail.
Quintanilla found the idea of Musk going to jail “funny,” but Faber maintained “that’s where he could end up.”
Cramer was also stunned by Faber’s comments about Musk going to jail, tweeting the following after the show:
Jail!?
— Jim Cramer (@jimcramer) July 11, 2022
Musk Made His Requests to Twitter CLEAR:
“If there were ever any doubt as to the nature of these information requests, the May 25 Letter made clear that Mr. Musk’s goal was to understand how many of Twitter’s claimed mDAUs were, in fact, fake or spam accounts.
That letter noted that Items 1.03 to 1.13 of the diligence request list contain high-priority requests for enterprise data and other information intended to enable Mr. Musk and his advisors to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform…” The letter then provided Twitter with a detailed list of requests to this effect.”
Musk continuously followed up with Twitter executives, requesting the incomplete information Twitter failed to provide…
“Since then, Mr. Musk has provided numerous additional follow-up requests, all aimed at filling the gaps in the incomplete information that Twitter provided in response to his broad requests for information relating to Twitter’s reported mDAU counts and reported estimates of false and spam accounts.
For example, in our letter to you dated June 29, 2022, we referenced Mr. Musk’s request in the May 25 Letter for “information that would allow him ‘to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.’”
Twitter Provided Insufficient Data to Musk
Because Twitter, by its own admission, provided only incomplete data that was not sufficient to perform such an independent assessment the June 29 Letter “endeavored to be even more specific, and to reduce the burden of the [original] request,” by identifying a specific subset of high priority information, responsive to Mr. Musk’s prior requests, for Twitter to immediately make available.
Why Did Twitter Take so Long to Provide Data?
“Mr. Musk sought the same information in letters dated June 6, 2022, June 17, 2022, and June 29, 2022. In each of these letters, Mr. Musk referenced his information rights under Section 6.4 of the Merger Agreement. Twitter has thus been on notice of the information sought by Mr. Musk—and the contractual bases for these requests—for two months.”
“For the past month, Mr. Musk has been clear that he views Twitter’s non-responsiveness as a material breach of the Merger Agreement giving him the right to terminate the Merger Agreement if uncured.”
“…Twitter was “refusing to comply with its obligations under the Merger Agreement. Thus, Mr. Musk has been clear about his requests, his right to seek such information, and his view regarding Twitter’s material breach of the Merger Agreement.
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ABOUT THE WRITER:
Elena Patestas is a journalist and writer for Valuetainment media. She attended Pepperdine University in Malibu, California, and Adelphi University on Long Island, New York. She was born and raised in Roslyn, New York, and currently lives in Miami, Florida.
Elena is passionate about bringing positive change to our world and believes education is the root to solving many societal problems. After overcoming a chronic health condition, Elena became passionate about health and believes food is the key to preventing dis-ease and achieving optimum health.
Amongst her many goals, she hopes to bring positive, impactful change to our world to create a healthy, financially sound, and unified society.
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