Twitter said Monday it will pay $809.5 million to settle a shareholder class-action lawsuit that accused the company of deceiving investors about how often users used the platform.
The settlement resolved a case that was about to go to trial. Jury selection was scheduled to begin on Monday, but at a hearing in Oakland, Calif., on Sept. 17, U.S. District Judge Jon Tigar postponed jury selection until late November.
Richard Costolo, Twitter's former chief executive, and Anthony Noto, its former chief financial officer, have denied wrongdoing in agreeing to the settlement. A settlement would also require Teague's approval.
Robbins Geller Rudman & Amp, the law firm representing shareholders; "Jury trials are a huge equalizer, even for some of the most powerful entities on the planet," said Tor Gronborg, a partner at Dowd.
In early afternoon trading, Twitter shares were down 3.8% at $60.11. Twitter said it expected to pay for the settlement in the fourth quarter of this year using existing cash and to record charges in the third quarter.
In September 2016, shareholders sued Twitter for driving up its share price by misleading shareholders about user engagement.
According to the complaint, Twitter stopped reporting "timeline views" in late 2014 and hid stagnant or declining engagement by reporting vague user metrics.
After Mr Costolo left the company in June 2015, Twitter admitted the truth and its share price fell 20 per cent, shareholders said.
The class action covers investors who bought the company's shares between February 6, 2015, and July 28, 2015.
According to the Securities Class Action Clearinghouse, of the more than 5,000 U.S. Securities class-action lawsuits filed by stock investors since 1996, only nine have gone to trial and resulted in a verdict.
More than half of the cases were dismissed, and most of the rest were eventually settled.