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Comment by CJefferson | Hacker News Reader

This article gives a really interesting overview of the facts: https://www.bloomberg.com/opinion/articles/2022-05-13/elon-m...

Basically, legally Musk is already past this point -- he signed a contract promising to buy Twitter without doing any real investigation. I've felt for a while he's looking for ways to squirm back out, but he legally can't (unless he simply can't raise the funds at all, that's what the $1 billion "exit fee" you may have heard about is).

Of course it's possible Elon will simply ignore the law, as in practice the rich can often simply ignore laws they don't like with limited consequences.

View on HN

Musk appears to care less and less about the law or his word. He broke numerous SEC rules in the bid and the share buying beofre, he's broken agreements with Twitter. He could let Twitter take him to court and drag it out for years whilst they stagnate in limbo and not really care.

The best leverage Twitter has is to threaten to take away his twitter account - hit him where it hurts.

> Musk appears to care less and less about the law or his word.

True, but that is because nobody tries to go after his stupid moves. Even the SEC seems to have given up. Twitter can absolutely force him to honor the contract he signed; but it's true it's unlikely they will do it, but they may. Why write up a big contract like this if there was no intention to enforce it in the first place?

> The best leverage Twitter has is to threaten to take away his twitter account - hit him where it hurts.

Yes, that would be extremely funny, and a big relief for everyone.

Twitter didn't want him to buy Twitter, so they should be happy to accept the $1B fine. Whether Musk follows the law or not, I think that anybody except maybe DT will be happy to see this deal fail.

The $1B fine is if Musk can't raise the capital - he's already submitted to the SEC how he has raised it - the contract gives Twitter the right to force him to close. Only a massive Tesla stock collapse would perhaps result in him being able to walk away with the $1B fine.

As per the contract, he can't walk out and pay $1B. He absolutely has to buy.

Of course, everything can be negotiated. But should the other party not want to negotiate, they have the legal means to force him to buy.

The SEC doesn't write laws.

> the rich can often simply ignore laws they don't like with limited consequences

I don't know why people have such a moralistic view on contract law. What should the consequences be of breaking a contract? A fine is pretty normal and enforceable. Stop acting like its some kind of personal affront to your ethics that someone agrees to buy something, watch the market tank and rethink the price. Imagine you agreed to buy a house and the house gets set on fire, dropping the value by 30%? Wouldn't you try to renegotiate or get out of the contract? Now do that with billions of dollars.

> Imagine you agreed to buy a house and the house gets set on fire, dropping the value by 30%? Wouldn't you try to renegotiate or get out of the contract?

Those contingencies are written into the offer. This is why you have a real estate agent, they know what they're doing. You don't need to illegally break the contract, because it'll already be in the contract.

It’s not Illegal to exercise an exist clause or include one from either party

You mean exit clause? That's exactly what I was talking about, so I don't understand your reply.

This is not a moralistic view, did I mention ethics? Just an observation. I find it hard to escape contracts and laws in general. Musk, and other rich people don't. Do you agree it is much easier to escape significant punishment if you have much more money?

Consequences should obviously be proportional to wealth and power. https://en.m.wiktionary.org/wiki/sleep_under_the_same_bridge

> Basically, legally Musk is already past this point -- he signed a contract promising to buy Twitter

Perhaps. But Musk is wrecking Twitter at almost no cost to himself. His lawyers will try proving that Twitter board lied to investors for years. So current management is a toast.

And no one would be willing to buy Twitter at current valuation. Except Bill Gates perhaps....

The SEC filings provide the actual insight. No reasonable person would try to claim that the filings are a lie to investors if you actually read them. It is a dead end for muskrat.

>legally Musk is already past this point -- he signed a contract promising to buy Twitter without doing any real investigation.

He agreed to buy based on twitter public filings. Those might turn out to be a lie. Ask Mike Lynch how selling a company based on SEC filings filled with lies ends up.

https://www.cio.com/article/304397/the-hp-autonomy-lawsuit-t...

https://www.computerweekly.com/news/252512620/British-court-...

Mike Lynch was involved in a "multibillion dollar accounting cover-up". Musk can walk away if Twitter’s securities filings are wrong but only if that would lead to a “Material Adverse Effect” on the company:

> Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.

https://www.bloomberg.com/opinion/articles/2022-05-13/elon-m...

What is the main product twitter sells? How would lying about the quality and quantity of said product not be significant?

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