Twitter Agreed to Pay $809 Million to Settle SEC Lawsuit from Investors
Twitter has agreed to pay $809.5 million to shareholders who filed a class action lawsuit alleging that the social networking company deceived them about the platform’s traffic.
In re: Twitter Inc. Securities Litigation
Twitter Agreed to Settle; Denies Wrongdoing
On Monday, September 20, 2021, Twitter announced that it would pay $809.5 million to resolve a shareholder class action lawsuit alleging the social media company of misleading investors about the frequency with which its platform was used.
The Twitter SEC Settlement agreement brought an end to a case that was on the approach of proceeding to trial. Jury selection was planned to begin on Monday, but U.S. District Judge Jon Tigar of Oakland, California, moved it until late November during a September 17 hearing.
Twitter, former CEO Richard Costolo, and former CFO Anthony Noto all denied misconduct in agreeing towards the settlement, which must be approved by Tigar.
“The jury trial is an excellent equalizer, even for some of the world’s most powerful companies,” Tor Gronborg, a representative of the shareholders, said.
Twitter’s shares fell by 3.8% to $60.11 in early afternoon trading. Twitter stated that it anticipates paying the settlement amount with cash on hand in the fourth quarter of this year and recording a related charge in the third quarter.
Recap: Twitter SEC Class Action Lawsuit, 2016
In September 2016, shareholders sued Twitter, saying that the company artificially boosted its stock price by deceiving them about consumer engagement.
Twitter allegedly ceased publishing “timeline views” during late 2014 and obscured stagnant or declining consumer engagement by giving vague definitions of user metrics.
Shareholders asserted that Twitter acknowledged the truth following Costolo’s departure in June 2015, when the company’s stock price fell 20%.
The Twitter SEC Settlement is intended for investors who bought the stock between February 6, 2015 – July 28, 2015.
Since 1996, the Securities Class Action Clearinghouse reported that only nine of the more than 5,000 securities class action lawsuits filed by stock investors in the United States had reached a verdict.
A little more than half of class action lawsuits were dismissed, and the majority of the remainder are settled.
Editor’s Note on Twitter SEC Settlement For $809 Million:
This article is written to inform you of the $809.5 million class action settlement to be paid by Twitter to settle a lawsuit filed against it in 2016 concerning stock prices. You might also be interested in reading about the Charles Schwab Intelligent Portfolio Lawsuit.
Case Name & No.: In re: Twitter Inc. Securities Litigation, Case No. 3:16-cv-05314
Jurisdiction: U.S. District Court for the Northern District of California
Allegations: Twitter allegedly artificially spiked its stock price by deceiving its shareholders regarding the platform’s usage.
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