The Securities and Exchange Commission today charged Lyft Inc. for failing to disclose a company board director’s role in a shareholder’s sale of approximately $424 million worth of private shares of Lyft’s stock prior to the company’s initial public offering (IPO).
According to the SEC’s order, prior to Lyft’s IPO in March 2019, a Lyft board director arranged for a shareholder to sell its shares to a special purpose vehicle (“SPV”) set up by an investment adviser affiliated with the same director. The director then contacted an investor interested in purchasing the shares through the SPV. According to the SEC’s order, Lyft, which approved the sale and secured a number of terms in the contract, was a participant in the transaction, and the director was a related person by virtue of his position and because he received millions of dollars in compensation from the investment adviser for his role in structuring and negotiating the deal. Lyft failed to disclose this information regarding the sale in its Form 10-K for 2019. The SEC’s order finds that the director left the Board at the time of the transaction.
‘Enforcement 40’ for 2020
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