Mike Isaac

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Twitter Faces $124 Million Lawsuit Over Private Share Sale

lawsuits_380-featureTwo financial firms filed a $124 million lawsuit against Twitter on Wednesday, just days before the microblogging company is set to debut on the New York Stock Exchange.

The firms, Precedo Capital Group and Continental Advisors, alleged that Twitter intentionally orchestrated a failed private sale of its shares in an attempt to increase investor interest before the company’s initial public offering.

According to the suit, “Twitter’s intention was to induce Precedo Capital and Continental Advisors to create an artificial private market wherein Twitter could maintain that a private market existed at or about $19 per share for the Twitter stock,” the document states. That, in turn, would allow Twitter to set an artificial price floor for its IPO near the top of the $17-$20 price range it had set, giving the company a $10.9 billion valuation at most.

“We’ve never had a relationship with these plaintiffs,” Jim Prosser, a Twitter spokesman, told AllThingsD. “Their claim is completely without merit.”

The firms allege that Twitter was motivated by the problems around secondary-market share sales that would eventually plague Facebook’s IPO, and sought to avoid an excess of shares hitting the market. To do this, the firms said, Twitter terminated an agreement it had with GSV Asset Management — an approved Twitter stock buyer — in which GSV was allowed to sell nearly $280 million in Twitter shares on the secondary market.

Precedo Capital and Continental Advisors intended to purchase shares from GSV through that since-terminated agreement, but now allege that Twitter never intended to allow the stock sales to occur.

Read the lawsuit in its entirety below:

[scribd id=180277240 key=key-178ixg6mu5om6hxgx207 mode=scroll]

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work