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U.S. judge dismisses case against Twitter alleging pre-IPO fraud

22
Apr
2014

By Jonathan Stempel NEW YORK (Reuters) – Twitter Inc has won the dismissal of an unusual lawsuit accusing the social media company of fraudulently arranging a private stock sale it never intended to complete, with a goal of stoking interest in its November 2013 initial public offering. U.S. District Judge Shira Scheindlin in Manhattan said Precedo Capital Group Inc and Continental Advisors SA failed to show that Twitter was responsible for the cancellation of a secondary market offering they had been arranging with another firm, GSV Asset Management Inc. Filed one week before Twitter went public, the $124 million lawsuit accused the company of using GSV as its agent to arrange the aborted offering as a means to raise more money in its eagerly awaited IPO and justify a $10 billion market valuation. Noting the plaintiffs dealt directly with GSV and never with Twitter, however, Scheindlin said the complaint does not plausibly allege that Twitter granted GSV Asset express authority to act as its agent for any purpose.

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