Twitter said Monday it would pay $ 809.5 million (about Rs.5,960 billion) to settle a class action lawsuit accusing the social media company of misleading investors about how many times they are People have used his platform.
The deal resolved a case that was close to trial. Jury selection was due to begin Monday, but at a September 17 hearing in Oakland, California, U.S. District Judge Jon Tigar postponed it to late November.
Twitter, former chief executive officer Richard Costolo and former chief financial officer Anthony Noto denied that they agreed to the settlement, which requires Tigar’s approval.
“The jury trial is a great balance even for some of the most powerful companies in the world,” said Tor Gronborg, partner at Robbins Geller Rudman & Dowd, who represents shareholders.
In early afternoon trading, Twitter shares fell 3.8 percent to $ 60.11 (roughly Rs 4,420). Twitter said it expects it will use cash to pay the settlement amount in the fourth quarter of this year and post a corresponding fee in the third quarter.
Shareholders sued Twitter in September 2016, claiming it artificially inflated its share price by misleading them about user engagement.
According to the complaint, Twitter stopped reporting “timeline views” in late 2014 and masked stagnant or declining user engagement by reporting vague descriptions of user metrics.
Shareholders said Twitter acknowledged the truth after Costolo left the company in June 2015 and its share price fell 20 percent.
The class action lawsuit includes investors who purchased the stock between February 6, 2015 and July 28, 2015.
Since 1996, only nine of the more than 5,000 US securities class actions filed by stock investors have come to court, the Securities Class Action Clearinghouse said.
Slightly more than half of the complaints are dismissed, the rest are largely settled.
© Thomson Reuters 2021
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