Financial Firms Accuse Twitter of Fraud, Sue for $124 Million

By Catherine Yang, Epoch Times
October 30, 2013 Updated: October 30, 2013

Two financial advisory firms hit Twitter with a $124 million lawsuit Wednesday, alleging Twitter promised them $278 million worth of shares through a third party.

Arizon-based Precedo Capital and Luxembourg-based Continental Advisors had worked with GSV Asset Management last year to establish a valuation for Twitter shares, according to the complaint filed.

Twitter released a statement in response. “We’ve never had a relationship with these plaintiffs. Their claim is completely without merit.”

Precedo and Continental contend they had worked with Matthew Hanson of GSV Asset to provide pre-IPO Twitter shares for them. They were planning to market the shares to other investors. The firms claim Twitter then advised GSV Asset to cancel their orders. Precedo and Continental therefore had to give back over $4 million to global investors, which led to millions in extra costs and severe damage to their reputations. 

The firms are also accusing Twitter of establishing a private market price “that could be reasonably relied upon in an IPO,” according to the filed complaint.

Twitter’s IPO is expected to happen as early as next week, with the share price set between $17 and $20. On Wednesday, the company and its banking advisers held an event to answer investors’ questions at the Mandarin Oriental hotel in New York City. 

The company has been looking for ways to monetize the social network, including recent television partnerships such as the Nielsen Twitter TV rating. 

On the native side, Twitter has purchased technology making it easier for people to advertise, and yesterday expanded the feed to include visuals. Photos and video previews now show up in the user’s feed whereas in the past a user had to click a link to view them. The company hopes this will increase ad revenue.