THE THREE FORMER Harvard students whose legal challenge against Facebook founder Mark Zuckerberg was the subject of a major Hollywood film last year are to return to court in an attempt to win a larger settlement.
Twins Tyler and Cameron Winklevoss and Divya Narendra, three students who claim they hired Zuckerberg to create a social network called ‘Harvard Connection’ – only for Zuckerberg to set up TheFacebook.com while supposedly working on their project – are to return to court tomorrow, claiming that their original settlement conned them out of further millions.
The $65m settlement – which, as the Wall Street Journal reports, included $45m in Facebook stock – formed the subject of David Fincher’s movie The Social Network, which grossed just under $200m in cinema releases last year.
Now the Winklevoss twins and Narendra claim, however, that they were not given an accurate picture of the company’s valuation, and that the share deal they received as a result effectively conned them out of further millions.
Tomorrow they will ask a court in San Francisco to undo their original settlement to their claim, allowing them to once again pursue Zuckerberg and Facebook itself for a greater share of the company.
BBC quotes the trio’s senior lawyer, Jerome Falk, as explaining that the $45m stock settlement was based on a value of $36 a share, but that Facebook’s own directors approved a deal allowing employees to partake in a stock option programme which valued shares at $9.
That valuation had not been made known to them, Falk explained, which resulted in the settlement have been given four times as many shares as they ultimately received. Facebook was in violation of federal law, he maintained, by refusing to disclose the insider valuation.
WSJ, however, estimates that the share of the firm that the trio – known as the ‘ConnectU’ team, after the revised name of their ‘Harvard Connection’ project — and the value attached to them at the time would have implied a $15bn valuation regardless.
Regardless, if the Ninth District Court tomorrow allows the original settlement to be made void, Facebook will be left to decide whether it will offer a revised settlement, or whether it will defend its position in court.
A ruling on the case is not expected for several months, however. Zuckerberg is unlikely to attend tomorrow’s hearing, though Facebook will offer a defence in the case.
The Winklevoss twins have since represented the USA in the Olympic Games in Beijing, though they finished outside the medals in the men’s coxless pairs; since the collapse of ConnectU, they have concentrated on training for the London games next year.