Lyft agrees to pay a $10 million fine to settle SEC charges that it failed to disclose that board directors sold shares to Carl Icahn ahead of his 2019 IPO to George Soros for his role in the process.
U.S. Securities and Exchange Commission Monday said A Lyft director arranged to sell a 2.6% stake in Lyft ahead of the company’s IPO, but the director’s financial interest in the sale was not disclosed. Three people with direct knowledge of the matter confirmed that the director was Jonathan Christodoro and that the sale was ultimately between the two billionaires.
According to people familiar with the matter, Cristolo arranged for Icahn, who as a Lyft investor put Cristolo on the board, to sell $424 million worth of his private stock in the ride-sharing giant. The Securities and Exchange Commission said this represents a discount to the expected IPO price.
The SEC did not identify Icahn, Soros or Christodoro in its statement, and no one was accused of wrongdoing in the statement. The people who identified the three people asked not to be named discussing confidential information.
Disclosure failed
Regulators said the San Francisco-based ride-sharing company failed to properly disclose the directors’ financial interests in the transactions, without admitting or denying the allegations during the settlement process. Christodolo allegedly received management and performance fees on the deal and resigned from the board at the time of the deal in March 2019, according to a securities filing at the time.
Representatives for Lyft did not respond to requests for comment. Christolo’s attorney, Andrew Michaelson, declined to comment. Representatives for Icahn and Soros did not respond to requests for comment.
The Securities and Exchange Commission said that ahead of Lyft’s initial public offering in late March 2019, a shareholder refused to sign a lock-up order that would have restricted the person from selling Lyft stock for 180 days after the offering. People familiar with the matter said the unidentified shareholder was Icahn.
The SEC said the seller owns about 2.6% of Lyft.
Cristolo contacted an investor to whom the stockholder would sell stock. People familiar with the matter said that this party member is Soros. Christodolo then allegedly helped structure a deal to sell 7.7 million Lyft shares and get approval from Lyft’s board of directors.
The shares were sold to a special purpose vehicle set up by one of Christolo’s companies, and Soros then acquired the shares by becoming a partner in the special purpose vehicle, according to people familiar with the matter and an SEC order.
The SEC has been investigating the deal since at least 2020, two people familiar with the matter said.
The SEC said the director, Christodoro, failed to disclose to Lyft his material interest in the deal and received millions of dollars for his role in arranging the deal. Soros sold his Lyft stake in the third quarter of 2019, according to securities filings.
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