In a complaint filed yesterday, two firms that set up “roadshows” and other sales presentations to market Twitter shares accuse Twitter, acting though a company called GSV Asset Management, of using the potential sales for the purpose of boosting the IPO price, while never actually intending to sell any shares:
Twitter intended to support a market price of Twitter stock by using Plaintiffs to secure high net worth and institutional investors to determine what the interest was in purchasing Twitter stock. Twitter’s intention was to never sell the stockholders’ shares that it controlled. Rather, Twitter, through Plaintiffs, would be able to establish a private market price that could be reasonably relied upon in an IPO. In fixing a private market floor price, Twitter’s goal was to establish a market value. To induce Plaintiffs to obtain investors, Twitter, through GSV Asset, misrepresented that the reason for selling the stockholder shares of stock was to assure that there would not be a market overhang of Twitter stock.
The case is before Judge Scheindlin. The N.Y. Times story on the complaint is here. You can follow our blog in Twitter here.