Twitter Shareholders Can Review CEO Dorsey’s Records, Judge Says

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By Jennifer Bennett

Twitter investors claiming the company misled them about user engagement can review founder and CEO Jack Dorsey’s records, a federal judge said.

Twitter Inc. must produce CEO Dorsey’s documents to the shareholders, according to U.S. Magistrate Judge Sallie Kim’s Feb. 7 discovery order. However, shareholders are blocked from seeing Dorsey and other executives’ direct messages.

Twitter faces a class action alleging its former CEO, Dick Costolo, and former chief financial officer, Anthony Noto, misled shareholders about the company’s user engagement, according to a September 2016 complaint filed in the U.S. District Court for the Northern District of California.

Dorsey, who served as Twitter’s CEO from 2007 to 2008, resumed that position in June 2015 and was the one who told shareholders about the “true state of affairs of Twitter’s metrics” in July 2015, according to Kim’s order. Although other Twitter executives’ documents might have much of the same information, there’s a chance Dorsey’s documents will have something the others don’t, so shareholders should have access to them, Kim said.

Direct Messages are Protected

Shareholders also requested access to certain Twitter executives’ direct messages, according to Kim’s order. Direct messages are private messages sent from one Twitter user to another, and all Twitter users—not just Twitter executives—have access to this function.

Federal law bars communication services providers such as Twitter from disclosing users’ private communications. Because Twitter didn’t require executives to communicate through direct messages, their privacy rights must be respected, and shareholders can procure only the named individual defendants’ direct messages, Kim said. Dorsey is not one of the named defendants.

Twitter’s Feb. 8 earnings call revealed about 330 million monthly active users, with user engagement still a key metric for shareholders, according to a Bloomberg report.

A Twitter representative declined to comment. An attorney for the shareholder class didn’t immediately respond to a request for comment.

The case is In re Twitter Inc. Securities Litigation , N.D. Cal., No. 3:16-cv-05314, 2/7/18 .

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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