BuzzFeed
Within hours of BuzzFeed going public in December of last year, the publisher's stock began plummeting. Many workers hoping to cash out on their stock were unable to do so until the value had already fallen 60% to below $5 per share, and some are allegedly still unable to sell their shares.
Collectively, the complainants held 900,000 shares in Buzzfeed at the time of its IPO. On the day of the IPO, the stock opened up 14% at $10.95 per share. All told, the complainants say the company's mistakes cost them $8.7 million.
According to the complaints, BuzzFeed failed to give employees the information they needed to properly handle the company stock. The employees received Class B shares from BuzzFeed which have to be converted before they can be sold, a fact that the complaint says the employees were unaware of.
In order to sell, the employees would have needed to file paperwork prior to the IPO, but the employees say they didn't have the opportunity to complete this application until after the company had already gone public.
"The Kafkaesque tribulations through which the claimants were dragged have wreaked havoc on their financial lives," one employee complaint reads.
The complainants said that the information provided about converting the stocks was contradictory. They also claim that the company didn't inform employees that the conversion process would take three to five business days until the stock price had already begun rapidly declining.
The complaints were made with the dispute resolution agency the American Arbitration Association because the employees' contracts require some disputes to be resolved out of court. This is relatively common for employment contracts.
The complaints name BuzzFeed founder Jonah Peretti and other top BuzzFeed execs, as well as Adam Rothstein, the CEO of a shell company that merged with BuzzFeed who also helped the company with its IPO.
"It's regrettable that the stock price declined, but there is no merit to the claims and we intend to rebut them vigorously," a spokesperson for the media company said. "BuzzFeed prioritized communication with former and current employees last year to provide them with the information they needed to manage their equity."
Most of the employees involved in the complaints were hired back when BuzzFeed was still a small start-up. Many say they accepted lower salaries in exchange for stock options, with Peretti regularly enthusing about the eventual plan to take the company public.
In order to go public, BuzzFeed merged with a special purpose acquisition company (SPAC) in a deal that valued the company at $1.5 billion. Since then, the company's value has dropped nearly 70%. Prior to the IPO, the SPAC raised $250 million from investors, but 94% of those funds were withdrawn by the time the merger was complete. Despite the drastic drop in investment, BuzzFeed execs stood by their plan to go public.
