Facebook Twins 'Stuck' With $160M Deal, Judge Rules

Two of the men who claim they (and not Mark Zuckerberg) created Facebook have failed in a bid to increase a previous settlement. Cameron and Tyler Winklevoss are stuck with the original court ruling awarding the men $20 million plus 1.25 million shares in the social networking firm.

Twins Sue Zuckerberg for Facebook Rights

As memorably depicted in the Oscar-nominated movie The Social Network, the twins sued after alleging that fellow Harvard student Mark Zuckerberg, who they had hired to create a similar networking website, had unfairly stolen the idea to set up his own enterprise.

Although the case never got as far as a court verdict, Zuckerberg eventually reached a settlement to pay money to the pair in return for dropping the claim. The deal involved Zuckerberg handing over $20 million in cash, along with 1.25 million shares in the company.

The Price Not Right, Pair Argues

It was the value of those shares -- which, because Facebook remains a private company, aren't yet available to trade on official stock markets -- that led to the new legal case.

According to the Winklevosses, they were led to believe the shares were worth $35.90 each, a valuation based on the details of a then-recent investment by Microsoft in the company.

The pair said they later discovered that Facebook had listed the shares at $8.88 in a document valuing their worth for tax purposes. In bringing the new case, the Winklevosses said had they known of this lower valuation, they would have demanded more shares as part of the agreement. (Source: google.com)

You're Stuck With It, Judge Rules

According to the judges in the new case, though, the pair must stick to their original deal.

Chief Judge Alex Kozinski noted the pair had access to confidential information about Facebook as part of the original case, that they received advice from their father (an expert in financial valuation), and thus that they bore full responsibility for deciding to accept the deal.

In a strange coincidence, a dramatic rise in the price of Facebook stock means that the Winklevosses' stake in the company is now worth around $160 million, which is almost exactly what the pair say they thought the deal was worth at the time. (Source: marketwatch.com)

A third student, Divya Narenda, also received a payoff as part of the original deal. He was not involved in the new legal case.