Mr. Systrom and Mike Krieger, the other founder of Instagram, held several meetings as late as March with top Twitter executives, according to people on both sides of the negotiations, who requested anonymity because the talks were supposed to be private and because they were concerned about legal repercussions. These people said the two sides had verbally agreed just weeks earlier on a price for Instagram of $525 million in cash and Twitter shares.

Mr. Systrom told Twitter on March 20 that he and Mr. Krieger had thought about the offer and had decided to “remain independent.” Less than three weeks later, Twitter found out, along with the rest of the world, that Instagram had agreed to be acquired by Facebook in a $1 billion deal negotiated personally by Facebook’s chief executive, Mark Zuckerberg.

The people familiar with the negotiations said Twitter executives were shocked that they had not been given an opportunity to present a counteroffer. They said Twitter was prepared to make higher offers.

Systrom said during the hearing that he was not offered a term sheet by any other potential suitor. In fact, Twitter had offered him one, but he told them to hold onto it while he weighed his options. Systrom, who used to work in Google’s mergers and acquisitions department, took particular care in talking to Twitter during negotiations, choosing not to meet with the company in either of their offices. The inquiry came up out of investor concern that the buyout, which occurred months before Facebook’s IPO, may not have been in Instagram’s best interest.