(Updates sourcing and nature of the payment)
Sept 8 (Reuters) - Twitter Inc agreed in June to pay $7 million to settle a compensation dispute with the whistleblower whose allegations will be part of Elon Musk's case against the company, according to a source familiar with the matter.
Whistleblower Peiter "Mudge" Zatko, who was fired by Twitter in January and was the company's security head, last month accused the social media firm of falsely claiming it had a solid security plan and making misleading statements about its defenses against hackers and spam accounts.
Zatko will meet the U.S. Senate Judiciary committee on Sept. 13 to discuss the allegations.
The settlement resolved a dispute about unpaid compensation and did not prevent him from filing a whistleblower complaint, which he did soon after reaching the agreement with Twitter, according to the source.
Zatko's attorney said Zatko cannot comment on the existence of a settlement with Twitter.
Zatko's settlement was first reported by the Wall Street Journal, which said he agreed to a nondisclosure agreement that forbids him from speaking publicly about his time at Twitter or disparaging the company.
Details of Zatko's settlement will soon be made public in the court filings in Twitter's legal battle with Musk, who has claimed he can walk away from his $44-billion agreement to buy the social media company.
Musk has alleged the company misled him about the number of bots or fake accounts on the platform and about the proper way to measure active users. Twitter is suing him to force him to buy the company for $54.20 a share. A trial is scheduled for next month.
Twitter stock was up about 1% in late Thursday trade at $41.72 a share.
Twitter did not immediately respond to a Reuters request for comment. (Reporting by Nivedita Balu in Bengaluru; Editing by Shounak Dasgupta and Nick Zieminski)