Lyft is threatening litigation against Morgan Stanley, accusing the firm of supporting short-selling

  • In a letter sent to Morgan Stanley on April 2, Lyft questioned the firm about its alleged role in helping market certain products that would help pre-IPO investors bet against the stock.
  • CNBC reviewed a copy of this letter, which was signed by Peter Stris of the law firm Stris & Maher, serving as the counsel for Lyft.
  • Morgan Stanley has strongly denied the allegations.

Lyft has threatened litigation against Morgan Stanley, accusing the firm of supporting short-selling for investors who are subject to lock-up agreements.

In a letter sent to Morgan Stanley on April 2, Lyft questioned the firm about its alleged role in helping market certain products that would help pre-IPO investors bet against the stock.

CNBC reviewed a copy of this letter, which was signed by Lyft’s counsel Peter Stris of the law firm Stris & Maher. Lyft declined to comment.

The letter was prompted by reporting in the New York Post, which said Morgan Stanley had been selling a short product to pre-IPO investors and cited three sources close to the situation.

Lyft asked Morgan Stanley to go on record saying that they did not create such a product, and that they had engaged in the proper due diligence in marketing such a product.

The letter, which copied Lyft’s lead underwriters JP Morgan and Credit Suisse, also asks that if Morgan Stanley did engage in such activity that they stop immediately and turn over a list of shareholders who participated.

While the letter requested that Morgan Stanley respond by the end of the day on April 2, two source close to the matter said that as of late Friday, the firm had yet to do so formally. Both people asked for anonymity discussing private details involving the dispute.

However, a Morgan Stanley spokesperson provided a statement to CNBC, saying that the firm “did not market or execute, directly or indirectly, a sale, short sale, hedge, swap or transfer of risk or value associated with Lyft stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement.”

The Information first reported that Lyft and its IPO syndicate had sent a letter to Morgan Stanley over its purported role in creating special instruments for pre-IPO investors to short.

In the letter, Lyft said that it has the ability to take legal action against Morgan Stanley and asked that the firm turn over relevant documents in advance of potential litigation.

www.cnbc.com/2019/04/06/lyft-is-threatening-litigation-against-morgan-stanley-accusing-the-firm-of-supporting-short-selling.html

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