CNBC contributor says Musk could be jailed for backing out of Twitter deal

Mercurial Tesla CEO Elon Musk has filed paperwork announcing his decision to back out of his highly-publicized acquisition of Twitter, and in the opinion of one prominent commentator, the move could land the controversial billionaire behind bars, as the New York Post notes.

During an on-air chat with fellow network contributors Jim Cramer and Carl Quintanilla, CNBC’s David Faber suggested that Musk’s attempt to bail on the $44 billion dollar deal could create a “situation where they could put him in jail.”

Musk wants out

As NBC News reported, Musk declared earlier this month that he would not follow through with his takeover of the tech firm, contending that the company had breached key provisions of the agreement between the parties, particularly with regard to Twitter’s pledge to share details about the volume of spam and fake accounts on the platform, which the company claims amounts to less than 5% of users, but Musk suspects could be upwards of 20%.

The outspoken entrepreneur’s July 8 filing declared, “Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests.”

“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” the filing added, according to NPR.

In response, however, the company’s board chair Bret Taylor posted a message on the platform declaring, “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” and as promised, litigation against Musk was indeed initiated in Delaware Chancery Court on Friday.

High stakes battle looms

Speaking to Cramer and Quintanilla during an appearance on Squawk on the Street even before Twitter took the matter to court, Faber predicted a heated court battle in which the company would fight tooth and nail to push the sale through to completion, noting, “[t]hey have specific performance in the contract” with Musk and will not be content to accept the $1 billion breakup fee included in the sale agreement.

“Then the question is, ok, you are forcing Mr. Musk to buy the company, does he actually agree to do it? There is this argument being said lately that, well, maybe he won’t comply with that. Then we would have a situation where they could put him in jail,” Faber continued.

Though his remarks elicited laughter from Quintanilla, Faber stood firm, saying, “I know you laugh, but that’s where we could end up. This is a man who doesn’t play by the rules.

Cramer also chimed in, telling his colleague, “David, the takeaway is going to be ‘Faber says Musk going to jail.’ You’ve got about 10 seconds to repeal that,” though no retraction was forthcoming.

Possible, not probable

Faber is not alone in floating the notion of jail for a recalcitrant Musk, as Columbia University law professor John Coffee noted to Fox Business’ Charlie Gasparino in May that even in a civil case, contempt of court charges are always a possibility that could result in incarceration, with the network personality later recounting that if Musk violated an injunction secured by Twitter, “he could go to jail for contempt until he complied.”

Bloomberg’s Matt Levine, however, injected a dose of reality into the conversation recently, noting that Musk could indeed refuse to buy Twitter despite an order from the court to do so, but even under such a scenario, “They’re not gonna put him in Chancery jail” and adding that Musk “thinks he is above the law and he might be right.”

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