Twitter Gets Sued For $124 Million
Twitter has been sued for $124 million by two financial companies that claim the social media company engineered a failures private sale of their shares to increase investor interest for their initial public offering. Precedo Capital Group Inc. and Continental Advisors SA sued Twitter in a Manhattan federal court claiming that Twitter used the blocked sale to set a $10 billion valuation for themselves and floor price for the IPO.
“Twitter never intended to complete the private sale of Twitter stock,” stated the companies in a complaint. “Twitter’s intention was to induce Precedo Capital and Continental Advisors to create an artificial private market wherein Twitter could maintain that a private market existed at or about $19 per share for the Twitter stock.”
Twitter is planning to raise as much as $1.4 billion in their initial public offering. The IPO is expected to happen on November 6th. Based on the higher end of the proposed range, Twitter would be valued at around $10.9 billion. Twitter has more than doubled revenues every year, but they have not hit a profit yet.
The lawsuit was filed under Precedo Capital Group Inc. v. Twitter Inc., 1:13-cv-07678, U.S. District Court, Southern District of New York (Manhattan).