Lawyers for both Elon Musk and Twitter subpoenaed a whistleblower who said the social media platform’s executives did not know or care to find out how many accounts were spam or robot accounts as the billionaire seeks to cancel a $44 billion buyout of the company.
Peiter Zatko, Twitter’s former head of security, said in a whistleblower complaint last week that the company had “egregious deficiencies” in its defences against hackers and lacked concern for privacy issues.
Mr Zatko also said he raised his concerns about the number of bots in the system and claimed those apprehensions were ignored the company's executives.
Mr Musk is seeking evidence from Mr Zatko to bolster his legal argument so that he can walk away from the Twitter deal over the bot issue.
Twitter sued Mr Musk in July to force him to complete his proposed acquisition. Since then, more than 100 people, banks, funds and other companies have been subpoenaed in the Delaware suit, with a trial scheduled to begin on October 17.
The billionaire filed a court document Monday saying he had subpoenaed Mr Zatko, followed later in the day with a similar filing by Twitter.
Mr Zatko is also scheduled to give evidence before a US Senate committee on September 13 about his allegations.
A Twitter representative declined to comment on Monday. Last week, the company called Mr Zatko’s complaint “a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context”.
Whistleblower Aid, the group representing Mr Zatko, did not immediately respond to a request for comment.
The subpoenas are aimed at getting Mr Zatko to hand over documents about his bot concerns and anything else he knows about Twitter’s metrics for evaluating customers that can be “monetised” for advertising purposes.
The information demand also focuses on what Mr Zatko knows about Twitter’s securities filings, particularly its statements about bots making up about 5 per cent of its customer base, according to court documents.
Mr Musk’s lawyers said last week they had already subpoenaed Mr Zatko. However, no record of the information demand was on the court docket until Monday.
In the complaint, Mr Zatko said Twitter’s “Integrity Team” was reluctant to dig deeply into how many bot accounts were included in the platform’s customer base.
That left the former security executive thinking “the company had no appetite to properly measure the prevalence of bots, in part because if the true number became public, it could harm the company’s value and image”.
Mr Musk has argued that Twitter’s regulatory disclosures putting spam and bot accounts at no more than 5 per cent of its customer base were misleading.
The Tesla chief executive has made public some of his analysis of the issue, which holds that a full third of Twitter’s more than 230 million users may fall into the bot category.
If that is the case, Mr Musk contends it creates a material adverse event that justifies the move to cancel his $54.20-a-share deal under Delaware law.
The state is the corporate home of more than half of US public companies, including Twitter and Tesla, along with more than 60 per cent of Fortune 500 businesses. Its chancery court judges are business law experts who hear cases on a fast-track basis.
Also on Monday, depositions were set for Patrick O’Malley and Kristen Salen, two advisers of Mr Musk on the Twitter deal, for later this week.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
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