Two companies filed a $124 million lawsuit against Twitter Inc. on Wednesday, claiming the social-media company misled them during a planned private sale of its shares that went sour, Reuters reports.

In a lawsuit filed in U.S. District Court in Manhattan, Precedo Capital Group Inc., an Arizona-based broker dealer, and Continental Advisors SA, a Luxembourg financial adviser, claim that Twitter used the aborted sale as a way to give the money-losing company a $10 billion market valuation and a higher price for its IPO.

The lawsuit alleges that Twitter intentionally defrauded the companies by never intending to complete the private offering, causing the plaintiffs to lose commissions, fees and expenses as well as damaging their business reputation. 

The two companies are seeking $24.2 million in compensatory damages and $100 million in punitive damages among other remedies.

Jim Prosser, a spokesman for Twitter, in a statement obtained by Reuters said the company had never had a relationship with Precedo or Continental Advisors.

"Their claim is completely without merit," he added.

The lawsuit said that Twitter sought to control the number of shares available on private markets by only working with approved vendors. According to the lawsuit, Twitter was concerned about avoiding the problems that afflicted Facebook Inc.'s (Nasdaq:FB) $16 billion offering.

Precedo and Continental said that a vendor called GSV Asset Management contacted them about setting up a private fund that could only purchase Twitter shares, then arranged for them to purchase shares in $50 million blocks. But according to the lawsuit, Twitter decided to block the sale after discovering that Precedo and Continental had investors willing to pay $19 a share, well above the $17 or less the shares were valued at in other private market deals.

Last week, Twitter said that it would offer its shares at between $17 and $20 each, giving the San Francisco company a valuation of about $11 billion. No date has been set yet but market watchers believe the IPO could happen as early as next week.