Twitter Inc. agreed to pay $809.5 million on Monday. This payment is to fix a shareholder class-action case that accused the social media company of deceiving its investors.
Earlier, Twitter was accused of deceiving its investors about how often people use it. This settlement resolves a case that was about to go for trial. The jury selection was to begin this Monday. But, on September 17, the hearing was postponed till late November. The district judge, Jon Tigar, in Oakland, California, postponed the hearing.
Twitter’s former CEO Richard Costolo and CFO Anthony Noto deny any wrongdoings to agree to the settlement. Now, the agreement requires Tigar’s approval.
This entire case impacted Twitter’s shares. Therefore in the early afternoon trading, Twitter Inc. shares were down 3.08% at $60.11. Twitter looks to pay the settlement money in cash on hand. Twitter will make the payment in the fourth quarter of this year. It will also record a charge in the third quarter.
The Shareholders sued Twitter Inc. with allegations of being misled about its user engagement. Also, they charged Twitter with artificial inflation of stock prices.
In 2014, Twitter stopped showing “timeline views”- the complaint reported. The Shareholders said that the company accepted the wrongdoings after Costolo left Twitter in 2015. Then, its stock prices dropped by 20%.
This case covers investors who bought the stocks from February 6, 2015, to July 28, 2015. As history says, most of the possibilities of conflicts get resolved either by dismissal or by settlement. This case of Shareholders vs Twitter Inc. looks to keep in line with the ones that have an ending through payment.