Lyft Enters a $10M SEC Storm Over Pre-IPO Stock Sale


However, Monday’s beckon for a response from Lyft’s counsel remained unanswered.

The Twisting Tale of Shares

Diving deeper, the narrative unfolds around an anonymous shareholder who, having acquired around 7.7 million shares back in 2015, made a strategic move just weeks ahead of the IPO. This amounted to a slice of approximately 2.6% of the company.

Then, the plot thickens. In anticipation of its IPO, Lyft championed “lock-up agreements,” binding shareholders to a 180-day stock retention post-IPO. However, our unnamed shareholder veered off this path, asserting an intention to offload at least half of his shares pre-IPO.

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Lyft’s internal protocols mandated such sales to gain the board’s nod. In response, a special board committee convened, tasked with overseeing the sale. Amidst brewing concerns over potential insider trading linked to privileged information, the committee initially halted the sale.

A solution surfaced – privatizing the transaction. Swiftly, as March 2019 dawned, negotiations were underway involving the director, shareholder, and a third-party investor, leading to the creation of a unique vehicle orchestrated by an investment guru.