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Anonymous ID: daebda April 6, 2019, 11:35 a.m. No.6074124   🗄️.is đź”—kun

Morgan Stanley, which is underwriting Uber’s IPO, is denying reports that it marketed a short-selling product to Lyft investors

 

It’s getting bare-knuckled out there again in the ride-hailing wars.

 

According to a report earlier today from The Information, newly public Lyft threatened Morgan Stanley with legal action earlier this week, demanding in a letter that the powerful investment bank stop marketing a short-selling product that it believed was disrupting trading in its stock.

 

The outlet says Lyft learned about the product through the New York Post, which reported in its own, separate story early this week that Morgan Stanley — the lead underwriter for Uber’s IPO — had been calling pre-IPO investors in Lyft’s offering and pitching them on a way to lock in gains, regardless of Lyft’s lockup agreements with those investors.

 

At first glance, it seems like the kind of dirty pool we’ve grown accustomed to seeing between the rival companies and their associates. But Morgan Stanley spokesman Mark Lake tells TechCrunch that the New York Post report was flat-out wrong, providing us with the following statement: “Morgan Stanley did not market or execute, directly or indirectly, a sale, short sale, hedge, swap, or transfer of risk or value associated with Lyft’s stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement.

 

“Our firm’s activities have been in the normal course of market making, and any suggestion that Morgan Stanley engaged in an effort to apply short pressure to Lyft is false.”

 

What went wrong is hard to know, given that the Post shielded its sources. But it was descriptive in how it characterized the purported short-selling scheme. From its story:

 

Driving the unusual bets is language in Lyft’s lock-up agreements that has hedge funds and other early Lyft investors giving themselves a green light to make limited “short” bets, which make money on a stock’s decline. The goal is to position the bets in such a way that investors don’t benefit from a decline or a rise in the stock, but simply to lock in their IPO gains, which were significant.

 

“If I can lock in $70 now, I’m going to do that,” said an investor.

 

“Lyft made a mistake,” one investor who bought into Lyft shares prior to the IPO told The Post. “People who own the stock are allowed to hedge their positions. You are not allowed to reduce your economic interest.”

 

The investor was referring to a recent e-mail Lyft sent to investors reminding them that they are not allowed to engage in any transactions that might affect a holder’s “economic interest ” in the stock. This — and other “lock-up” language around the IPO — has Lyft investors protecting against a decline in an amount identical to their stock holdings, rather than betting on the stock’s decline.

 

We’ve reached out to Lyft for comment, which has yet to respond.

https://techcrunch.com/2019/04/05/morgan-stanley-which-is-underwriting-ubers-ipo-is-denying-reports-that-it-marketed-a-short-selling-product-to-lyft-investors/

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Lyft Threatens To Sue Uber's Lead Underwriter For Helping To Crash Its Stock

 

Desperate to explain the debacle following its recent IPO, when its stock crashed from its opening print of $87, tumbling below the $72 IPO price and then sliding some more for good measure to enter a bear market within 2 days of opening for trade, the newly public Lyft has found a scapegoat: the lead underwriter for the upcoming IPO of its biggest competitor, Uber.

 

After reading an unverified article in the NY Post, which said that Morgan Stanley was marketing a short-selling product that "appeared to offer Lyft’s pre-IPO shareholders a way to get around lockup agreements that prevent them from selling for at least six months after the IPO" and was allegedly depressing the Lyft stock price according to the Information, and facing investor ire for a bungled IPO, Lyft threatened the Times Square-based investment banking giant with legal action, demanding in an April 2 letter that the bank stop marketing the controversial product.

 

Whether or not Morgan Stanley was doing anything illegal, or anything at all for that matter, is unclear: according to the original Post report, "Morgan Stanley, a lead underwriter for Lyft rival Uber, is one of the brokerages selling a “short” product to pre-IPO investors."

rest of this one at link

https://www.zerohedge.com/news/2019-04-06/lyft-threatens-sue-ubers-lead-underwriter-helping-crash-its-stock

 

from March 13th

Uber hires more IPO underwriters as it prepares to go public: sources

https://finance.yahoo.com/news/uber-hires-more-ipo-underwriters-010608291.html