Twitter Nailed with $124M Lawsuit For Pulling Early Stock Sale

Part of Twitter's job as it approaches its IPO is to generate interest in its stock ahead of time. That's called the "road show," and it's where a company, in this case Twitter, basically pitches its brand, its products, and private stock. In one case the company may have generated too much excitement. Two companies, Precedo Capital Group and Continental Advisors SA, are suing Twitter for $124 million in damages.

The two firms allege that Twitter offered to sell some if its private shares early, but then pulled the offer after garnering interest from both companies. "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," the lawsuit reads, according to Reuters.

The blame may partially be in the hands of a third party, GSV Asset Management, which is buying shares of Twitter and was set to sell $50 million worth of its own purchase to Precedo and Continental Advisors. Once Twitter learned of the deal, it allegedly stepped in and prevented it from going through.

Twitter denies any link to both firms and said there's no merit to the suit or the claims. So far Twitter has avoided a lot of the negative news that afflicted Facebook's IPO. The company is largely trying to avoid any of the issues that arose for Facebook, and even chose the New York Stock Exchange (NYSE) over Nasdaq to help alleviate any concerns of a problematic opening day.