Twitter pays $810m to settle lawsuit after misleading growth comments
But Twitter denied its executives lied or knowingly made misleading statements, and rejected the idea that statements by two executives caused the stock price to fall
20 September 2021 - 18:02
byMolly Schuetz and Robert Burnson
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Twitter agreed to pay $809.5m to settle a shareholder class-action lawsuit that accused the social media company of painting an overly rosy picture of its future.
The suit, originally filed by Twitter shareholder Doris Shenwick, claimed executives misled investors over the company’s growth prospects in November 2014, promising an increase in monthly active users to 550-million in the “intermediate” term and more than 1-billion in the “longer term”. The company failed to deliver on either estimate and concealed that it had no basis for those projections, according to the complaint.
The suit was filed in federal court in San Francisco in 2016, the year after the company’s stock took a nose dive after executives disclosed the platform’s sluggish growth. After five years of litigation, the case had come down to three allegedly misleading statements made by Twitter executives concerning the growth of the platform. A trial set for Monday was postponed on Friday last week ahead of the settlement.
The proposed settlement concludes without any admission of fault or wrongdoing by Twitter, according to a statement by the company on Monday. In its defence, Twitter had denied that its executives lied or knowingly made misleading statements. It also rejected the idea that statements by former CFO Anthony Noto and former CEO Dick Costolo caused the stock price to fall.
Twitter didn’t immediately respond to a voicemail seeking comment on the agreement.
Under the pact, Twitter intends to use cash on hand to pay the settlement amount in the fourth quarter and expects to record a charge for the settlement during the third quarter of 2021.
Bloomberg News. More stories like this are available on bloomberg.com
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Twitter pays $810m to settle lawsuit after misleading growth comments
But Twitter denied its executives lied or knowingly made misleading statements, and rejected the idea that statements by two executives caused the stock price to fall
Twitter agreed to pay $809.5m to settle a shareholder class-action lawsuit that accused the social media company of painting an overly rosy picture of its future.
The suit, originally filed by Twitter shareholder Doris Shenwick, claimed executives misled investors over the company’s growth prospects in November 2014, promising an increase in monthly active users to 550-million in the “intermediate” term and more than 1-billion in the “longer term”. The company failed to deliver on either estimate and concealed that it had no basis for those projections, according to the complaint.
The suit was filed in federal court in San Francisco in 2016, the year after the company’s stock took a nose dive after executives disclosed the platform’s sluggish growth. After five years of litigation, the case had come down to three allegedly misleading statements made by Twitter executives concerning the growth of the platform. A trial set for Monday was postponed on Friday last week ahead of the settlement.
The proposed settlement concludes without any admission of fault or wrongdoing by Twitter, according to a statement by the company on Monday. In its defence, Twitter had denied that its executives lied or knowingly made misleading statements. It also rejected the idea that statements by former CFO Anthony Noto and former CEO Dick Costolo caused the stock price to fall.
Twitter didn’t immediately respond to a voicemail seeking comment on the agreement.
Under the pact, Twitter intends to use cash on hand to pay the settlement amount in the fourth quarter and expects to record a charge for the settlement during the third quarter of 2021.
Bloomberg News. More stories like this are available on bloomberg.com
Reddit triples value to $10bn
From Facebook to Twitter, Big Tech sees social commerce driving sales growth
Antiterror body now targets much more white supremacist online content
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.