Twitter Inc. executives should be held accountable for concealing operational problems at the popular social-media platform and firing a whistle-blower who sought to address the issues, according to an investor's lawsuit.
Jack Dorsey, Twitter's co-founder, Chief Executive Officer Parag Agrawal and other managers violated federal securities laws by making false statements about the operational miscues to bolster the platform's stock price, shareholder William Baker said in a federal suit filed Tuesday in California.
Baker alleges Agrawal and other Twitter executives "repeatedly discouraged" whistle-blower Peiter Zatko "from providing a full accounting of Twitter's security problems to the company's board of directors" as part of a cover up. Zatko was the company's head of computer security at the time.
The suit may be the first to rely on the whistle-blower's accusations as grounds for investors to hold Twitter executives liable for their alleged mishandling of Zatko's concerns. It's also one of the reasons Billionaire Elon Musk cites for canceling a $44 billion buyout of the company. A trial is set for Oct. 17 over whether the world's richest person must go through with his $54.20-a-share deal.
Twitter officials declined to comment on Baker's suit Wednesday.
The suit seeks class-action status on behalf of all Twitter shareholders who owned the stock over a two-year period starting in 2020. In his complaint, Baker argues the disclosure last month of Zatko's allegations sent Twitter shares down as much as 7%, "damaging investors."
The case is William Baker v. Twitter, 22-cv-06525, US District Court, Central District of California (Los Angeles).