Following a large class-action lawsuit, Twitter has agreed to an $809.5 million payout to settle a dispute stemming from claims that the social networking powerhouse “provided misleading information” to its investors.
As reported by The Hill, the complaint alleges that Twitter provided “unrealistic growth projections” during an event in November 2014 to assuage investor skepticism.
The original lawsuit was filed in 2016 by a Twitter shareholder, who claimed that CEO Jack Dorsey and other investors, including former CEO Dick Costolo and board member Evan Williams, withheld data about Twitter’s slowing user growth. This allowed them to sell their personal shares for “hundreds of millions of dollars.”
While several more plaintiffs were added to the securities fraud class action against Twitter, the National Elevator Industry Pension Fund, represented by Robbins Geller Rudman & Dowd, and KBC Asset Management NV, represented by Motley Rice LLC, remain the lead plaintiffs.
Following a legal dispute over four years, the defendants reached a settlement agreement with the whistleblowers for $800 million.
In addition, as part of the settlement agreement, Twitter and the defendants, including Dorsey and Costolo, may continue to deny any wrongdoing by them or the firm.
In a court filing released on Monday, Sept. 20, Twitter posted that it plans to use some of its available cash to settle its debt to the whistleblowers during the fourth quarter of 2021.
“The binding agreement, which is subject to certain conditions, including court approval of a final settlement agreement, requires the Company to pay $809.5 million for claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.”
The filing goes on to say, “The binding agreement does not, and the final settlement agreement will not, include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant.”
According to Twitter’s latest earnings statement filed in June 2021, the giant has $4 billion in cash on hand and about $4.5 billion in short-term investment assets.
The stated amounts confirm that it has sufficient funds to meet the settlement payment. However, the payment of over $800 million to whistleblowers is substantial.
Twitter, in addition to the criticisms and denunciations carried out by some of its investors, has also been the center of criticism during the last years, and especially during the end of 2020 and 2021, for its censorship role and evident ideological charge when allowing or eliminating certain speeches from its platforms.
Conservative sectors were the most affected by the censorship of the social network. At the same time, progressivism and leftist messages flourish without any hindrance, often even promulgated by dictators or terrorists who can continue to use their profiles without restriction.