Twitter disclosed a binding agreement to settle a class-action lawsuit, under which the social network will pay $809.5 million to resolve claims it provided misleading user-engagement info to investors
disclosed a binding agreement to settle a class-action lawsuit, under which the social network will pay $809.5 million to resolve claims it provided misleading user-engagement info to investors.
The original lawsuit, filed in 2016 by a Twitter shareholder, alleged Dorsey and others including former CEO Dick Costolo and board member Evan Williams hid facts about Twitter’s slowing user growth while they sold their personal stock holdings “for hundreds of millions of dollars in insider profits.” The complaint alleged the company was tracking daily active users as the primary indicator of Twitter’s user engagement by early 2015 but didn’t reveal that to investors at the time .
The company said it intends to use cash on hand to pay the settlement amount, expected to be paid in the fourth quarter of 2021. Twitter expects to record a charge for the settlement during the third quarter of 2021. As of June 30, 2021, Twitter had $4.13 billion in cash and equivalents as well as short-term investments worth $4.48 billion. The company topped Wall Street financial expectations. For the period, Twitter said it had average monetizable daily active users of 206 million, up from 199 million in the first quarter and up 11% year over year, with international markets accounting for all of the growth as U.S. DAUs declined by 1 million sequentially.
The two lead plaintiffs in the securities fraud class-action suit against Twitter were the National Elevator Industry Pension Fund, represented by Robbins Geller Rudman & Dowd, and KBC Asset Management NV, represented by Motley Rice LLC.
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