According to a complaint filed on Monday in Delaware Chancery Court, former senior executives of Twitter sued the company to recover over $1 million in legal costs incurred in responding to shareholder suits, federal investigations, and a congressional hearing.
In the lawsuit filed by former Twitter CEO Parag Agrawal and former Chief Legal Officer Vijaya Gadde, as well as former Chief Financial Officer Ned Segal, it is alleged that Twitter failed to reimburse their lawyers' fees according to prior agreements made with the company. Elon Musk immediately fired the executives after completing the acquisition of the company.
CNN's comment request was not immediately responded to by Twitter, who cut a large part of their public relations team in the past year. The New York Times was the first to report on this complaint.
According to the exhibits included in the complaint, Gadde spent over $1 million on her preparation for her testimony before the House Oversight Committee. The panel was holding an hearing in February that focused on allegations Twitter censored Conservative speech.
The complaint describes the legal fees associated with investigations by the Securities and Exchange Commission and Justice Department. However, it does not disclose many details of the investigations. The federal investigations referred to in the complaint highlight the legal risks that Twitter faces under Musk. Musk is struggling to stabilize the company's finances, while also pushing for significant changes to its product with a small team.
SEC previously investigated Musk's investment and deal to purchase Twitter, as well as his apparent delay in disclosing the size of his ownership stake. Last month, the Federal Trade Commission confirmed a broad investigation into Twitter’s privacy practices. The Justice Department had not confirmed an investigation of the company.
The lawsuit provides some information about the DOJ/SEC investigations. The lawsuit claims that Agrawal, Segal and other US officials began sending requests to Agrawal in July last year. According to the complaint, Agrawal received requests throughout the fall and even after he left Twitter. The complaint said that late last year the Justice Department contacted Agrawal's and Segal’s attorneys regarding multiple Twitter investigations.
According to the complaint, Twitter ignored letters asking for reimbursement of legal expenses for several months. The company acknowledged the reimbursement requests in March but did not pay. The complaint stated that the executives have yet to recover the fees as of Monday.