Fraud Lawsuit Against Twitter Dismissed

A lawsuit accusing Twitter Inc (NYSE:TWTR) of fraud involving its initial public offering was dismissed by US District Judge Shira Scheindlin in Manhattan today.

Fraud Lawsuit Against Twitter Dismissed

Private stock sale at issue

At issue were a group of shareholders who claimed Twitter Inc (NYSE:TWTR) arranged a private stock sale but never planned on selling stock.  Rather, the suit claims, the private stock sale talk was designed to pump up Twitter’s November, 2013 IPO.

$124 million suit in part sought “reputational” damages

Precedo Capital Group Inc and Continental Advisors SA, who brought the $124 million suit, did not show that that Twitter was responsible for the cancellation of the secondary market offering.  Further, “the complaint does not allege that Twitter Inc (NYSE:TWTR) secretly limited that authority contrary to the standard practice in the securities industry,” Scheindlin ruled, according to a Reuters report.

Brokers file lawsuit as stock nearly doubles

Precedo, an Arizona broker dealer, and Continental, a Luxembourg financial advisor, had claimed in their lawsuit claimed Twitter cost them fees and damanaged their reputation.  The two sought $24.2 million of compensatory damages plus $100 million of punitive damages.

Twitter Inc (NYSE:TWTR) stock was valued at $26 per share on November 6, 2013.  Today they are valued at $46.11.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com