Twitter Slapped With $124 Million Lawsuit Over Share Sales

Twitter Slapped With $124 Million Lawsuit Over Share Sales

Companies claim they were duped into setting up stock sales under false pretenses

Twitter has been slapped with a $124 million lawsuit by a pair of companies claiming that they were contracted to help sell shares in the company under false pretenses.

In the suit, filed in U.S. district court in New York on Monday, Arizona-based Precedo Capital, which provides broker dealer and financial services, and Luxembourgh-based financial consulting and advisory firm Continental Advisers said they reached an agreement with GSV Asset to help sell Twitter shares owned by employees, contractors or early-stage Twitter shareholders.

Also read: NBC News Exec Vivian Schiller Joins Twitter as Head of News

According to the complaint, the  companies went to work on setting up sales for the shares, undertaking an 18-day international road show to present their case to potential investors, resulting in more than $50 million in commitments to buy the stock.

However, the plaintiffs allege, the stock sale was called off, causing the plaintiffs to suffer “millions of dollars in of losses in commissions, fees and expenses, in addition to business reputation losses, in not completing the sale of Twitter stock to the accredited investors and institutions that subscribed and indicated for the purchase of Twitter stock.”

Also read: Twitter’s Investor Problem: It’s Not Popular Enough

Precedo and Continental say that they were led to believe that the stock sale was intended to eliminate the kind of market “overhang” of stock that plagued Facebook's initial public offering. But they contend that Twitter never intended to sell that stock through them, but rather used their legwork to establish a $19 per-share price for Twitter stock, as well as a $10 billion market value for Twitter, prior to the company's own upcoming initial public offering.

A spokesman for Twitter denied the claims of the suit, saying that the complaint is “completely without merit.

“We've never had a relationship with these plaintiffs,” Twitter said in a statement. “Their claim is completely without merit.”

Also read: Why Twitter Actually Does Matter to the TV Industry

Precedo and Continental are seeking more than $24 million in damages “due to lost fees, commissions and expenses,” plus $100 million in punitive damages.

Pamela Chelin contributed to this report.

  • Dale Latimer

    Luxembourg is not usually spelled with an ‘h', unlike Pittsburgh.

  • Jim

    Hey Alyssa DICK Milano!!! Reading this???? YOU LIAR!!!!