SEC Charges Lyft for Failing to Disclose Board Director's Role in Shareholder Sale
The Securities and Exchange Commission (SEC) has charged Lyft Inc. for failing to disclose a related transaction in its Form 10-K for 2019. According to the SEC’s order, a board director had arranged for a shareholder to sell approximately $424 million worth of private shares of Lyft’s stock prior to the company’s initial public offering (IPO). The director then contacted an investor interested in purchasing the shares through a special purpose vehicle set up by an investment adviser affiliated with the director. As Lyft had approved the terms of the sale and was a participant of the transaction, the director was considered a "related person" by virtue of his position and because he received millions of dollars in compensation from the investment adviser. Without admitting or denying the findings, Lyft agreed to a cease-and-desist order and to pay a $10 million civil penalty.