SEC asked Twitter about its spam account claims in June

Parag Agrawal, CEO of Twitter, and his wife Vineeta Agarwal, walk to a morning session during the Allen & Company Sun Valley Conference on July 07, 2022 in Sun Valley, Idaho.

In June of this year, the Securities and Exchange Commission asked for more information about how it calculates the percentage of fake accounts on its platform.

The countersuit was filed by Musk against the company after he was sued for trying to get out of his deal to buy the social media platform. According to its securities filing, less than 5% of its daily active users are fake. The figure has not been changed by the social networking site.

Wednesday's disclosure shows that it's not just Musk who tried to verify the numbers, though there is no indication that the agency is pursuing legal action.

Peiter "Mudge" Zatko, a former security lead for the social networking site, alleged yesterday that there were "extreme, egregious deficiencies" related to privacy, security and moderation.

A request for comment was not responded to by the company.

The SEC sent a letter to the company on June 15 asking for more information about the accounting for accounts that are not legitimate. There was an error in the mDAU calculations from the year 2019. The error was disclosed this year by the company.

The SEC wanted to know if there was a material weakness in your internal control over financial reporting and if your disclosure controls and procedures were effective as of March 31, 2022.

Wilson Sonsini wrote a letter to the SEC on June 22 saying that people manually review thousands of randomly chosen accounts out of those that count as mDAU. According to the letter, an account is marked as false if it violates at least one of the rules defined by the reviewers.

The company said that it didn't think there was a weakness in its internal financial reporting controls because of the overstatement. Data scientists at the company discovered an overstatement in 2022. Even if the primary account is active, the system will count all the linked accounts as mDAUs.

The overstatement did not affect other metrics or its financial statements, the company said.

The company and its management are responsible for the accuracy and adequacy of their disclosures according to the SEC.

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