LYFT Lyft Inc

By Will Feuer

Lyft has agreed to pay $10 million to settle charges brought by the Securities and Exchange Commission that allege the ride-hailing company failed to disclose a board member's role in arranging a pre-IPO stock sale.

Before Lyft's initial public offering in 2019, a Lyft board director arranged for a shareholder to sell $424 million worth of its private shares of Lyft's stock to a special purpose vehicle set up by an investment adviser affiliated with the same director, according to the SEC. The director then contacted an investor interested in purchasing the shares through the vehicle.

Lyft approved the sale and secured a number of terms in the contract, according to the SEC, making Lyft a participant in the deal. The director was a related person 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 annual report for 2019. The director left Lyft's board at the time of the deal, according to the SEC.

"The federal securities laws required Lyft to disclose that a director profited from a transaction in which Lyft itself was a participant," said Sheldon Pollock, associate regional director of the SEC's New York Office.

Write to Will Feuer at Will.Feuer@wsj.com

(END) Dow Jones Newswires

September 18, 2023 09:50 ET (13:50 GMT)

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