As revealed in new filings made public on Wednesday, the SEC (Securities and Exchanges Commission) conducted an active review of Twitter’s user numbers in response to Elon Musk's bot account allegations. The review was done weeks after Musk's allegations which means that federal regulators are considering Musk's claims seriously. The Elon Musk Twitter lawsuit was triggered after Musk reneged on the acquisition agreement with Twitter.
Quenching the Thirst for More Information
“We note your estimate that the average number of false or spam accounts during fiscal 2021 continues to represent fewer than 5% of mDAU. To the extent material, please disclose the methodology used in calculating these figures and the underlying judgments and assumptions used by management,” the commission wrote to Twitter in a letter dated June 15th.
Seven days later, the social media giant responded by sending a nine-page document describing the methodology it uses to calculate these numbers. This explanation is broadly consistent with Twitter's public statements.
"The review is conducted manually by humans reviewing (in replicate) thousands of accounts, randomly chosen out of the accounts that Twitter counts as mDAU. This review is conducted every quarter and Twitter has been performing this review for many years. Each human review assesses the selected accounts against a complex set of Twitter rules that define spam and platform manipulation, and, at a high level, an account is deemed to be “false” or “spam” if it violates one or more of Twitter’s rules regarding spam and platform manipulation," Twitter explained in the statement.
A new letter from the SEC announced the completion of the review on July 27. Even though it didn't say anything important, the letter did give a polite warning: We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action, or absence of action by the staff.“
Elon Musk Twitter Lawsuit commenced soon after Musk pulled out of the acquisition agreement he made with Twitter. Musk terminated the acquisition agreement citing a breach of contract. Musk is adamant that Twitter's claim of "only less than 5% are spam accounts" is false. He alleges that 20% of accounts are fake on Twitter.
Hiding the Bad Blood
A few days ago a media report announced that Twitter's former head of security, Peiter “Mudge” Zatko. had put out explosive allegations against the social media company. He accused the company of hiding negligent security practices, misleading federal regulators about its safety, and failing to accurately estimate the number of bots on its platform, according to his testimony.
Looks like Twitter's 5% story is falling apart after all. If SEC finds out the social media giant has been lying the repercussions could be serious. Definitely enough to put a bright smile on Elon's face!click here!
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