WeWork warns that it may have violated the Securities Act in S-1
Adam Neumann, Founder and CEO of WeWork.
Michael Nagle | Bloomberg | Getty Images
The We Company, WeWork's parent company, named spiral losses and the unpredictable real estate market as risk factors in the recently released IPO Prospectus Wednesday, but comments from CEO Adam Neumann may lead to some own risk.
Neumann gave interviews to Business Insider and Axios in May, just months before WeWork & # 39; s S-1[ads1] went public. These interviews are listed in WeWork & # 39; s S-1 as a potential risk to the business as they may violate the Securities and Exchange Commission & # 39; .
As the SEC states, the silent period "extends from the time a company submits a registration statement to the SEC to SEC employees declaring the registration statement & # 39; effective. & # 39;" WeWork announced in April that it had filed confidentially for an IPO in December 2018. [19659002] In both articles, Neumann and other WeWork executives discussed the company's "business strategy and results," the filing states. The company denied breach of quiet period rules and said it would "vigorously" dispute all allegations that it violated the Securities Act.
"We do not believe that our involvement in online news articles in May 2019 or other news articles constitutes a violation of Section 5 of the Securities Act," WeWork said in its S-1 filing.
If a court ruled that WeWork violated quiet period rules, the company said it would be required to repurchase all shares sold in its IPO for its original purchase price for one year after the infringement, "plus statutory interest."
WeWork encouraged investors to refer to the IPO prospectus, not recent news articles, when evaluating the company.
Tech companies are no stranger to flirting with SEC's quiet period rules. Google raised similar concerns when co-founders Larry Page and Sergey Brin gave Playboy magazine an interview ahead of the company's IPO in 2004.
Similarly, Match Group-owned Tinder flacked after CEO Sean Rad gave a controversial interview with London Evening Standard the night before the listing in 2015. In 2004, SEC Salesforce forced the listing to be delayed after CEO Marc Benioff spoke to the New York Times during the silent period.
