Twitter to pay $809.5 Million as settlement for a lawsuit
The Court is expected to approve the final settlement agreement between Twitter and its aggrieved shareholders.
Twitter Inc has agreed to pay $809.5 Million as a settlement for a class–action lawsuit.
A shareholder class action lawsuit was initiated in 2016 against Twitter, accusing it of defrauding investors.
The lawsuit was based on an allegation of metric manipulation of the microblogging app’s traffic.
The case has meanwhile been resolved amicably therefore litigation will no longer continue.
It was postponed until the end of November at a September 17 hearing.
Former CEO for Twitter, Richard Costolo, and former CFO, have both denied misconduct in agreeing to a settlement that demands the approval of Tigar.
Twitter shares fell from 3.8% to $ 60.11 and it decided to use the cash to offset the settlement amount by the fourth quarter of 2021 after fixing the related expenses.
Shareholders filed a lawsuit against Twitter in September 2016 arguing that it misled them about user interface through inflation of the stock price.
The complaint further indicated that at the end of 2014, Twitter stopped reporting “timeline views” and concealed the decline in user activity.
However after Costolo left the company in June 2015 and his share price dropped, Twitter accepted the truth.
The class-action lawsuit applies to investors who acquired shares from February 6, 2015, to July 28, 2015.
According to the securities Intelligence Service, only nine of the more than 5000 US security-related suits by equity investors have materialized since 1996.
However, more than half of the legal claims were rejected while the rest, satisfied.
The Court is expected to approve the final settlement agreement between Twitter and its aggrieved shareholders.
In 2018, Facebook faced a similar class-action suit by DZ Reserve and other plaintiffs, who made an allegation of the deceit of advertisers by the social media giant on the actual metrics of its ads reach.
The metric is used by advertisers to determine the number of people they reach. This shapes ad-buying decision.
The employees again indicated that the metric available to advertisers was made up of fake and duplicate accounts.
Facebook would have to grapple with a 10% revenue drop in its attempt to remove these fake and duplicated accounts.
Twitter however has agreed on a settlement rather than defending itself in court. Similarly, Facebook settled a lawsuit in 2019.
