Late last week, a motion for final approval in a class action lawsuit against Twitter was filed in the Northern District of California. This settlement was submitted to the court after over 6 years of litigation. The original lawsuit was brought against Twitter in September of 2016. The suit alleged that the defendant had caused damages to purchasers of Twitter stock between the dates of February 6, 2015 and July 28, 2015 by deceiving investors and withholding previously tracked metrics.
The plaintiff claimed that the defendant was inaccurately projecting the growth of monthly active users (MAUs), a key statistic used in projecting ad revenue for the company. They also claim that another key statistic used in these projections, timeline views, would no longer be made public because it was no longer representative of user engagement. The plaintiffs believe that these factors caused an artificially inflated stock valuation, which greatly affected stockholders when the two proceeding quarters heeded results that came in under those that were projected. As a result, the stock dropped from $48 on Feb. 5, 2015 to $31.24 on July 29, 2015. This marked an approximate 35% drop in stock price in under 6 months.
The proposed settlement would reward $809.5 million to all recognized class members who submitted Proof of Claim forms (over 401,000 were presented with forms), and would be handed out based on when they bought Twitter stock during the Class Period and whether and when they sold their shares. According to the motion for final approval, the settlement would be “the second-largest securities class action recovery ever obtained in the Ninth Circuit, ranks within the top 20 largest securities fraud settlements achieved since the passage of the Private Securities Litigation Act of 1995”.
In the motion, the plaintiff asserts that the settlement fulfills all of the standards for final approval, including requirements under rule 23(e)(2) regarding adequate representation, arms-length mediation, considered costs of delay, a plan for class member relief that is equitable for all members, and other factors required by the Ninth Circuit.
In addition to the settlement motion, the plaintiff also submitted a motion for request of attorney fees. The motion requests that the plaintiffs counsel be awarded 22.5% of the settlement fund ($182,137,500), as well as $3,570,056 in litigation costs. Lastly, it requests that the court award class representatives National Elevator Industry Pension Fund $6,531.00 and KBC Asset Management NV $28,000 for their time and expenses incurred in their representation of the class.
The plaintiff is represented by Robbins Geller Rudman & Dowd, Abraham, Fruchter & Twersky, Bleichmar Fonti & Auld, and Schneider Wallace Cottrell Konecky.
The defendant is represented by Simpson Thacher & Bartlett, Cooley, and Goodwin Procter.