(JustPatriots.com)- Social media giant Twitter just disclosed a binding agreement to settle a major class-action lawsuit, which will see the company handing out a massive $809.5 million. It comes after investors claimed that Twitter had given misleading user-engagement information.
The decision has been years in the making, with the lawsuit first being filed in 2016 by on Twitter shareholder who alleged that CEO Jack Dorsey, and other company officials, hid information about the slowing growth of Twitter’s userbase. At the same time, those company officials were selling personal stock holdings for “hundreds of millions of dollars in insider profits.”
Other claimants eventually became part of the suit, which alleged that Twitter was tracking its daily active users – DAUs – as the main indicator of engagement on the platform by 2015. However, at the time, investors were not given the full picture about engagement, and according to the suit, the figures showed behind the scenes that engagement was at best flat, and at worst declining.
In an 8-K filing made on Monday, Twitter said that the final settlement agreement won’t include or constitute an “admission, concession, or finding of any fault, liability, or wrongdoing” by Twitter but will instead simply be a way of making the case go away.
The agreement has been proposed, but it still requires the U.S. District Court for California’s Northern District to approve it first.
Cash on hand will be used to pay the settlement in the fourth quarter of this year. It’s a substantial amount of cash for Twitter, which had $4.13 billion in cash available as of the end of June this year.
With almost a quarter of the company’s finances gone in one sweep, it’s not certain how the platform intends to make up for the loss.
Read the filing here.