Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
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Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#2So I can see each pre I’ll investor in Lyft having a contract that prohibits shorting, though there are reports that the language is week enough that it’s possible that shareholders might actuallly be able to hedge their positions.
But what possible charge could Lyft bring against ms?
It’s not illegal for an investment bank to short a company nor is it illegal for them to write a bespoke contract that let The holder lock in a price for ther shares as long as they weren’t the ipo underwriter.
It’s also not uncommon for a hedge fund to buy a bespoke put on a company Colton an investment bank, I mean writing this type of instrument is a part of their trading desks business.
Also this fails a simple occam’s razor test once MS denied this.
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#3So I can see each pre I’ll investor in Lyft having a contract that prohibits shorting, though there are reports that the language is week enough that it’s possible that shareholders might actuallly be able to hedge their positions. But what possible charge could Lyft bring against ms? It’s not illegal for an investment bank to short a company nor is it illegal for them to write a bespoke contract that let The holder…
From the article
> tortious interference with the lock-up agreements
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#4Some other stories on this:
https://nypost.com/2019/04/05/lyft-threatens-morgan-stanley-... https://techcrunch.com/2019/04/05/morgan-stanley-which-is-un... https://www.theinformation.com/articles/lyft-threatened-morg...
The NYPost story includes the detail "We bought stock in a special acquisition vehicle and then the individual investors in the special acquisition vehicle shorted shares through Morgan Stanley ... Pre-IPO investors are contractually barred from reducing their “economic interest” in Lyft for six months, which includes shorting the stock. But sources say Lyft investors worked around the lock-up language by positioning the bets so that they won’t benefit from a decline or a rise in the stock. Instead, they simply lock in their IPO gains, which were significant."
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#5Some other stories on this: https://nypost.com/2019/04/05/lyft-threatens-morgan-stanley-... https://techcrunch.com/2019/04/05/morgan-stanley-which-is-un... https://www.theinformation.com/articles/lyft-threatened-morg... The NYPost story includes the detail "We bought stock in a special acquisition vehicle and then the individual investors in the special acquisition vehicle shorted shares through Morgan Stanley ... Pr…
>positioning the bets so that they won’t benefit from a decline or a rise in the stock. Instead, they simply lock in their IPO gains
Sounds like they were reducing their economic interest.
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#6Some other stories on this: https://nypost.com/2019/04/05/lyft-threatens-morgan-stanley-... https://techcrunch.com/2019/04/05/morgan-stanley-which-is-un... https://www.theinformation.com/articles/lyft-threatened-morg... The NYPost story includes the detail "We bought stock in a special acquisition vehicle and then the individual investors in the special acquisition vehicle shorted shares through Morgan Stanley ... Pr…
Does that mean pre-ipo investors can sell call options (when available) at the strike price = ipo stock price of $72 ?
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#7So I can see each pre I’ll investor in Lyft having a contract that prohibits shorting, though there are reports that the language is week enough that it’s possible that shareholders might actuallly be able to hedge their positions. But what possible charge could Lyft bring against ms? It’s not illegal for an investment bank to short a company nor is it illegal for them to write a bespoke contract that let The holder…
From the article > tortious interference with the lock-up agreements
I always wonder how these can be enforced anyway, same for employees. Employees carry a huge risk in case the Lyft stock falls flat, they still have to pay all the taxes and company might not withhold enough (dont have any details on that, but it's rather typical) - will be interesting to watch how this goes down.
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#8Wow, when companies complain about short sellers, it's generally pretty dumb (and a sell signal), but this sounds like MS was trying to help people get around lockup agreements which is pretty bad behavior if true.
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#9Some other stories on this: https://nypost.com/2019/04/05/lyft-threatens-morgan-stanley-... https://techcrunch.com/2019/04/05/morgan-stanley-which-is-un... https://www.theinformation.com/articles/lyft-threatened-morg... The NYPost story includes the detail "We bought stock in a special acquisition vehicle and then the individual investors in the special acquisition vehicle shorted shares through Morgan Stanley ... Pr…
Does that mean pre-ipo investors can sell call options (when available) at the strike price = ipo stock price of $72 ?
Option contracts are not available yet, i think.
Re: Lyft threatens lawsuit against Morgan Stanley, accusing support of short selling
#10Some other stories on this: https://nypost.com/2019/04/05/lyft-threatens-morgan-stanley-... https://techcrunch.com/2019/04/05/morgan-stanley-which-is-un... https://www.theinformation.com/articles/lyft-threatened-morg... The NYPost story includes the detail "We bought stock in a special acquisition vehicle and then the individual investors in the special acquisition vehicle shorted shares through Morgan Stanley ... Pr…
Finance at its best.