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Twins' bid to void Facebook settlement meets doubt
Reuters - Wednesday, January 12
By Dan Levine and Alexei Oreskovic
SAN FRANCISCO - Cameron and Tyler Winklevoss found a skeptical audience on Tuesday as they tried to persuade a U.S. appeals court to release them from a $65 million settlement over the founding of online social network Facebook.
The saga of the Winklevoss twins and Facebook Chief Executive Mark Zuckerberg became silver screen lore with the release of the film "The Social Network" last year. It has long been a legal battle as well.
Should the case be revived, it could be a big headache for the fast-growing social networking firm, which has seen a frenzy of investor interest for its privately held shares and is being closely-watched for signs that it might eventually stage a blockbuster initial public offering.
The 6-foot, 5-inch brothers were hard to miss in the front row at the U.S. Ninth Circuit Court of Appeals on Tuesday. The two, Olympic rowers who participated in the 2008 games in Beijing, wore dark suits and listened quietly as a three-judge panel peppered their attorney with questions.
Zuckerberg did not attend the court hearing involving his former Harvard University classmates. In the movie, actor Armie Hammer played both identical twins, who Zuckerberg's character snidely referred to on-screen as the "Winklevi."
The twins, along with Divya Narendra, started a company called ConnectU while at Harvard. They say that Zuckerberg stole their idea. Facebook denies these claims.
The twins argue that based on an internal valuation that Facebook did not disclose, they should have received more Facebook shares as part of their 2008 settlement resolving their lawsuit. Facebook argues it was under no obligation to reveal an internal valuation.
Judge Barry Silverman asked why the twins' attorneys didn't press harder for the internal figure during settlement talks.
"Why didn't you ask about that at the time?" he said.
Winklevoss attorney Jerome Falk argued that Facebook had a legal duty to disclose the information. Facebook attorney E. Mark Rosenkranz disagreed.
"It's called due diligence because it's supposed to be diligent," Rosenkranz said.
He later added that "ConnectU's founders struck a deal that made them very, very rich, and that's making them richer by the day."
After the hearing, Cameron Winklevoss said they are looking forward to a decision.
"I just think it's in the hands of the court," he said.
Facebook has said in court filings that the Winklevoss twins "suffered a bout of settlers' remorse" after agreeing to the deal which had been valued at $65 million. A Facebook representative said via email on Tuesday that the company appreciates the court's time and also looks forward to a decision.
Facebook earned $355 million in net income and $1.2 billion of revenue in 2010's first nine months, according to documents that Goldman Sachs provided to clients last week to entice investors in a special fund set up to invest in the social networking giant.
A growing secondary market has developed for trading private shares of Facebook.
A federal trial court judge refused to allow the twins and Narendra to get out of the settlement. The ConnectU founders then asked the 9th Circuit to revive the lawsuit to its pre-settlement status.
Senior Judge J. Clifford Wallace pointed out on Tuesday that the twins had several lawyers representing them at settlement talks, and that their father was a professor at the University of Pennsylvania's Wharton School.
That makes it difficult to believe that anyone took advantage of them, Wallace said.
"I agree my clients were not behind the barn door when brains were passed out," Falk said.
Goldman Sachs and Russia's Digital Sky Technologies this month snagged a deal to invest up to $1.5 billion in Facebook, valuing the world's No. 1 social network at roughly $50 billion -- exceeding the likes of Yahoo Inc and many other large, multinational companies.
Reuters - Wednesday, January 12
By Dan Levine and Alexei Oreskovic
SAN FRANCISCO - Cameron and Tyler Winklevoss found a skeptical audience on Tuesday as they tried to persuade a U.S. appeals court to release them from a $65 million settlement over the founding of online social network Facebook.
The saga of the Winklevoss twins and Facebook Chief Executive Mark Zuckerberg became silver screen lore with the release of the film "The Social Network" last year. It has long been a legal battle as well.
Should the case be revived, it could be a big headache for the fast-growing social networking firm, which has seen a frenzy of investor interest for its privately held shares and is being closely-watched for signs that it might eventually stage a blockbuster initial public offering.
The 6-foot, 5-inch brothers were hard to miss in the front row at the U.S. Ninth Circuit Court of Appeals on Tuesday. The two, Olympic rowers who participated in the 2008 games in Beijing, wore dark suits and listened quietly as a three-judge panel peppered their attorney with questions.
Zuckerberg did not attend the court hearing involving his former Harvard University classmates. In the movie, actor Armie Hammer played both identical twins, who Zuckerberg's character snidely referred to on-screen as the "Winklevi."
The twins, along with Divya Narendra, started a company called ConnectU while at Harvard. They say that Zuckerberg stole their idea. Facebook denies these claims.
The twins argue that based on an internal valuation that Facebook did not disclose, they should have received more Facebook shares as part of their 2008 settlement resolving their lawsuit. Facebook argues it was under no obligation to reveal an internal valuation.
Judge Barry Silverman asked why the twins' attorneys didn't press harder for the internal figure during settlement talks.
"Why didn't you ask about that at the time?" he said.
Winklevoss attorney Jerome Falk argued that Facebook had a legal duty to disclose the information. Facebook attorney E. Mark Rosenkranz disagreed.
"It's called due diligence because it's supposed to be diligent," Rosenkranz said.
He later added that "ConnectU's founders struck a deal that made them very, very rich, and that's making them richer by the day."
After the hearing, Cameron Winklevoss said they are looking forward to a decision.
"I just think it's in the hands of the court," he said.
Facebook has said in court filings that the Winklevoss twins "suffered a bout of settlers' remorse" after agreeing to the deal which had been valued at $65 million. A Facebook representative said via email on Tuesday that the company appreciates the court's time and also looks forward to a decision.
Facebook earned $355 million in net income and $1.2 billion of revenue in 2010's first nine months, according to documents that Goldman Sachs provided to clients last week to entice investors in a special fund set up to invest in the social networking giant.
A growing secondary market has developed for trading private shares of Facebook.
A federal trial court judge refused to allow the twins and Narendra to get out of the settlement. The ConnectU founders then asked the 9th Circuit to revive the lawsuit to its pre-settlement status.
Senior Judge J. Clifford Wallace pointed out on Tuesday that the twins had several lawyers representing them at settlement talks, and that their father was a professor at the University of Pennsylvania's Wharton School.
That makes it difficult to believe that anyone took advantage of them, Wallace said.
"I agree my clients were not behind the barn door when brains were passed out," Falk said.
Goldman Sachs and Russia's Digital Sky Technologies this month snagged a deal to invest up to $1.5 billion in Facebook, valuing the world's No. 1 social network at roughly $50 billion -- exceeding the likes of Yahoo Inc and many other large, multinational companies.
