Twitter to settle $800 million lawsuit
Twitter has announced that they will be paying an amount of $ 800 million to settle a class-action lawsuit filed by shareholders in 2016.
In the case it was alleged that the company had misled its investors about its daily and monthly user engagement.
Investors testified that Twitter had disguised the company’s slow-growing performance, which violated the Security Exchange Act of 1934. They alleged that the company had misled them without admission, concession, or finding of any fault, liability, or wrongdoing. The executive including, former CEO Dick Costolo and founders Evan Williams and Jack Dorsey (the current CEO), sold stock for hundreds of millions of dollars in insider profits.
According to the complainant statements filed by investors, ” The company was tracking Daily Active Users DAU’s as the primary indicator of Twitter’s user engagement by early 2015 but didn’t reveal that to investors at the time (when it was reporting monthly active users). According to the lawsuit, Twitter’s DAU figure showed that user engagement growth was either flat or declining.”
Twitter said they would use cash for the settlement by the end of the year 2021.