Two companies claimed Twitter committed fraud and slapped the social media network with a lawsuit.
The lawsuit, filed in the U.S. District Court in Manhattan by Precedo Capital Group Inc. and Continental Advisors SA, accused Twitter of ditching a sale in effort to get a $10 billion market valuation and a higher IPO price.
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According to Reuters, Precedo Capital Group Inc. and Continental Advisors SA are seeking $24.2 million in compensatory damages and $100 million for punitive damages and other issues.
The lawsuit noted, "Twitter never intended to complete the offering on behalf of Twitter stockholders, in the private market, thereby causing substantial damages to the plaintiffs in the loss of commissions, fees and expenses, as well as through their business reputation."
A spokesperson on behalf of Twitter stated the social media website never had a business relationship with Continental Advisors SA or Precedo Capital Group Inc.
While Twitter has not entered the stock market yet, analyst project the website to enter during the week of Nov. 4. The San Francisco-based organization stated it would offer shares between $17 and $20 each, which would give Twitter a value of approximately $11 billion.
The two companies suing Twitter added that they've lined up $278 million for shares. The companies stated Twitter blocked the sale due to investors wanting to pay $19 per share, which is more than the private market transactions.
"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," Continental Advisors SA or Precedo Capital Group Inc. stated.
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