Lyft Inc. agreed to pay a $10 million penalty to settle US Securities and Exchange Commission claims that it failed to disclose a board director’s involvement in a share sale just before the company’s initial public offering in 2019.
(Bloomberg) — Lyft Inc. agreed to pay a $10 million penalty to settle US Securities and Exchange Commission claims that it failed to disclose a board director’s involvement in a share sale just before the company’s initial public offering in 2019.
The person, who resigned from the board at the time of the transaction in March 2019, arranged for a Lyft investor to sell $424 million worth of private shares before the company’s IPO, the SEC said on Monday. The regulator said that the San Francisco-based ride-sharing firm, which didn’t admit to or deny the allegations in settling the case, failed to properly disclose details of the transaction.
A representative for Lyft didn’t immediately respond to a request for comment. The ex-director, who allegedly received both management fees and performance fees in the transaction, wasn’t identified by the SEC.
Ahead of Lyft’s IPO in late March 2019, a shareholder declined to sign the lock-up that would’ve restricted it from selling Lyft shares for 180 days following the offering, the SEC alleged.
The shareholder — who was not identified by the SEC — instead said it would like to sell shares before or in the offering. The unidentified shareholder owned about 2.6% of Lyft, the SEC said, and had placed a director to the ride-share giant’s board.
That director reached out to an investor to whom the shareholder would sell, according to the regulator. The person allegedly constructed a transaction where 7.7 million shares of Lyft were sold at a discount to the anticipated IPO price, which the Lyft board approved.
The director didn’t disclose his material interest in the transaction to Lyft and received millions of dollars for his role in arranging the deal, the SEC said.
(Updates with case details throughout story)
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