Twitter hit with $124 million lawsuit over private stock sale

Wed Oct 30, 2013 2:04pm EDT
 
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By Nate Raymond and Jonathan Stempel

NEW YORK (Reuters) - Twitter Inc was sued for $124 million on Wednesday by two companies claiming the social media darling fraudulently had them organize a private sale of its shares to stoke investor interest for an initial public offering then canceled it.

In a lawsuit filed in U.S. District Court in Manhattan, Precedo Capital Group Inc and Continental Advisors SA accused Twitter of using the aborted sale as a way to give the money-losing company a $10 billion market valuation and higher IPO price.

"Twitter never intended to complete the offering on behalf of Twitter stockholders, in the private market, thereby causing substantial damages to the plaintiffs in the loss of commissions, fees and expenses, as well as through their business reputation," the lawsuit said.

The financial firms seek $24.2 million of compensatory damages, $100 million of punitive damages and other remedies.

Jim Prosser, a spokesman for Twitter, in a statement said the company had never had a relationship with Precedo or Continental Advisors.

"Their claim is completely without merit," he added.

The lawsuit comes as anticipation builds for Twitter's IPO, widely considered the most highly awaited since Facebook Inc went public in May 2012.

Last week, the San Francisco-based company said it would offer its shares at between $17 and $20 each, valuing the company at up to about $11 billion. No date has been set yet but market watchers believe the IPO could happen as early as next week.   Continued...

 
A person holds a magnifying glass over a computer screen displaying Twitter logos, in this picture illustration taken in Skopje September 10, 2013. REUTERS/Ognen Teofilovski