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There are again naked souls in the stormy wars.
According to a report released today by The Information, Lyft, a new member of the public, has threatened Morgan Stanley with a lawsuit earlier this week, demanding in a letter that the powerful bank of the United States. investment stops marketing a product sold short which, in its opinion, disrupted the trading of its 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 the pre-IPO investors in the Lyft bid and had presented them way to realize gains, regardless of the blocking deals entered into between Lyft and these investors.
It looks like the dirty pool we used to see between rival companies and their associates. 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 associated 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 creating a market, and any suggestion that Morgan Stanley 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 are told that no further action has been taken except for the letter that Lyft's lawyers sent to the bank.
That the story ends here remains to be seen. The information has updated its original message to include part of Morgan Stanley's refusal statement, but it continues to report that, according to one of its sources, Morgan Stanley had called the first Lyft investors for weeks during his roadshow and launched them in a short time. – sales transaction that would allow them to lock in winnings, regardless of blockage.
Assuming that Morgan Stanley is telling the truth – and we can not imagine the bank declaring the minutes otherwise – it remains to be seen who divulged the misinformation about a product sold short. Stay tuned.
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