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TWITTER SEEKS TO SETTLE 2016 CLASS ACTION LAWSUIT WITH SHAREHOLDERS FOR $809.5-MILLION

Twitter Inc. said on Monday it would pay US$809.5-million to settle a shareholder class-action lawsuit accusing the social-media company of deceiving investors about how often people used its platform.

The settlement resolved a case that had been on the verge of going to trial.

Jury selection had been scheduled to begin on Monday, but at a Sept. 17 hearing in Oakland, Calif., U.S. District Judge Jon Tigar postponed it until late November.

Twitter, former chief executive officer Richard Costolo and former chief financial officer Anthony Noto denied wrongdoing in agreeing to the settlement, which requires Justice Tigar’s approval.

“The jury trial is a great equalizer, even for some of the most powerful entities on the planet,” said Tor Gronborg, a partner at Robbins Geller Rudman & Dowd representing the shareholders.

Twitter shares closed down 2.4 per cent at US$60.95. Twitter said it expects to use cash on hand to pay the settlement amount in the fourth quarter of this year, and record a related charge in the third quarter.

Shareholders sued Twitter in September, 2016, alleging it artificially inflated its stock price by misleading them about user engagement.

According to the complaint, Twitter discontinued reporting “timeline views” in late 2014, and concealed stagnating or declining user engagement by reporting vague descriptions of user metrics.

Shareholders said Twitter acknowledged the truth after Mr. Costolo left the company in June, 2015, and its stock price dropped 20 per cent.

The class action covers investors who purchased the stock from Feb. 6, 2015, to July 28, 2015.

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2021-09-21T07:00:00.0000000Z

2021-09-21T07:00:00.0000000Z

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