SEC Charges Lyft for Failing to Disclose Board Director's Role in Shareholder Sale

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.