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The war is getting dirtier and dirtier and dirtier.
According to a new report by The Information, Lyft, a new public, has threatened Morgan Stanley with lawsuits earlier this week, demanding in a letter that the bank cease marketing a product sold short that it believes would disrupt the market. trading of his shares.
Lyft has learned of the existence of this product through the New York Post, which announced in a separate article this week that Morgan Stanley, the main underwriter of Uber's IPO, had called investors from the pre-IPO in the Lyft bid and had presented them way to lock in winnings, regardless of the blockage.
It looks like the dirty pool we used to see between rival companies and their badociates. But Morgan Stanley spokesman Mark Lake told TechCrunch that the New York Post report was totally false, providing us with the following statement: "Morgan Stanley has not marketed or executed, directly or indirectly , a sale, a short sale, a hedge, a swap, etc. or the transfer of the risk or value badociated with the Lyft Shares to any Lyft Shareholder identified by the Company or otherwise known to us as being the subject of a Lyft Blocking Agreement.
The business of our company is normally in the process of market creation, and any suggestion that Morgan Stanley has attempted to apply brief pressure to Lyft is false. "
It's hard to know what went wrong because the Post protected its sources. But he was very descriptive in the way he characterized the so-called short sale system. From its history:
Lyft's unusual contracts encourage hedge funds and other first-stage investors to give themselves the green light to make limited "short" bets, which bring money down to the downside. The objective is to position the bets so that investors do not benefit from a fall or a rise in the security, but simply to block the significant gains made during their IPO, which were considerable.
"If I can keep 70 dollars now, I will do it," said one investor.
"Lyft made a mistake," an investor told The Post who had bought Lyft shares before it went public. "The people who own the shares are allowed to cover their positions. You are not allowed to reduce your economic interest. "
The investor was referring to a recent email sent by Lyft to investors reminding them that they are not permitted to perform transactions that could affect the economic interest of the holder. This – and other "lock-in" clauses around the IPO – protects Lyft's investors against a drop in the amount of their holdings of equities, rather than relying on falling stocks.
We solicited feedback from Lyft, which has not yet responded.
A source close to the situation confirms that Lyft's anger against Morgan Stanley is entirely based on this article, as reported in The Information. We were told that no further action had been taken other than the letter sent to the bank by Lyft's lawyers.
That the story ends here remains to be seen. Assuming that Morgan Stanley is telling the truth, the question of who leaked erroneous information about the product sold short remains. Stay tuned.
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