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Lyft will pay $10 million for failing to disclose board member’s role in pre-IPO stock sale

Published: September 18, 2023 at 9:35 am ET

By Will Feuer

Lyft has agreed to pay $10 million to settle allegations made by the Securities and Exchange Commission that the ride-hailing company played a board member’s role in orchestrating a pre-IPO stock sale has not disclosed.

Before Lyft’s IPO in 2019, a Lyft board director arranged for a shareholder to sell $424 million…

By Will Feuer

Lyft has agreed to pay $10 million to settle allegations made by the Securities and Exchange Commission that the ride-hailing company played a board member’s role in orchestrating a pre-IPO stock sale has not disclosed.

Before Lyft’s initial public offering in 2019, a Lyft board member arranged for a shareholder to sell $424 million of his private Lyft shares to a special purpose vehicle formed by an investment adviser affiliated with the same director, according to the SEC. The director then contacted an investor who was interested in purchasing the shares through the vehicle.

According to the SEC, Lyft agreed to the sale and secured a number of contractual terms, giving Lyft a stake in the deal. The director was a related party because of his role on the board, the SEC said, and because he received millions of dollars in compensation from the investment adviser for his role in structuring and negotiating the deal.

The SEC said Lyft should have disclosed the deal in its 2019 annual report. The director resigned from Lyft’s board at the time of the deal, the SEC said.

“Federal securities laws required Lyft to disclose that a director benefited from a transaction in which Lyft itself was a party,” said Sheldon Pollock, deputy regional director of the SEC’s New York office.

Write to Will Feuer at [email protected]

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