NEW YORK — Two financial firms sued Twitter Inc. Wednesday, saying it staged a ruse to boost the company’s valuation above $10 billion for its upcoming IPO.
Precedo Capital Group, of Scottsdale, Ariz., and Continental Advisors, of Luxembourg, seek $124 million in damages for ‘‘wanton and egregious’’ misrepresentations.
Twitter’s planned sale of 70 million shares would be the biggest technology IPO since Facebook’s last year. Last week, Twitter set a range of $17 to $20 per share for its initial public offering. At $20, Twitter would be valued at $12.5 billion.
The two firms said they conducted a roadshow through several countries in September 2012, lining up institutional funds, asset managers, and high-net-worth individuals to buy $278 million worth of Twitter shares. The lawsuit accuses Twitter of seeking an artificial market to ensure at least a $19-per-share price, injuring the public because the initial offering price will not be based on the price-to-earnings ratio and balance sheet valuations.
‘‘The public will now be purchasing shares at an inflated price,” the lawsuit said.
Twitter said: ‘‘We’ve never had a relationship with these plaintiffs. Their claim is completely without merit.’’
The suit said the financial firms took to the road after a Twitter shareholder, GSV Asset Management Inc., claimed in March 2012 that it had a deal with Twitter to sell $50 million to $278 million worth of Twitter stock owned by employees, contractors, and others.
In the roadshow, 47 presentations were made. After obtaining $50 million in commitments at $19 per share, Twitter blocked the sale, causing the plaintiffs to lose millions, the suit said. “Twitter never intended to complete the private sale,” the lawsuit said. ‘‘Twitter’s intention was to induce Precedo Capital and Continental Advisors to create an artificial private market wherein Twitter could maintain that a private market existed at or about $19 per share for the Twitter stock.’’