44 ex- and current employees allege BuzzFeed caused workers to lose the ability to sell shares at a higher value when it made its debut on New York Stock Exchange.
The New York Times reportedTuesday’s announcement by the group was that it had filed a lawsuit against the American Arbitration Association for at least $4.6 Million in damages.
BuzzFeed claimed that it failed to instruct workers on how to trade shares right away after going public in December 2021.
Its stock price plunged shortly after BuzzFeed, Inc., became the first digital media company to go public. The employees, which collectively held more than 400,000 shares when it went public, claim that they were not able to trade their shares until their value had fallen by nearly 60% — to less than $5 per share. Some workers claim they weren’t able to trade their shares.
“BuzzFeed prioritized communication with former and current employees last year to provide them with the information they needed to manage their equity,”BuzzFeed’s representative stated Tuesday that the company had released a statement to New York Times, adding: “It’s regrettable that the stock price declined, but there is no merit to the claims and we intend to rebut them vigorously.”
Buzzfeed shareholders’ decision to go public has long been riddled with issues. Buzzfeed News Union and BuzzFeed management were locked in contract negotiations that had stalled days before the initial public offer, which was scheduled to coincide with Complex Media’s acquisition and merger with a special purpose acquisition company (SPAC). 890 5th Avenue Partners.
Investors retracted almost all the $250 million raised through the special purpose acquisition corporation (SPAC), bringing down the company to $16 million. Workers argued that BuzzFeed owed it a duty to reconsider its plans to make the company public.
When the company went public on Dec. 6, workers were given unclear instructions on how to trade stocks and were told that conversion of shares would take three to five days – all while their value continued declining, the New York Times reported of the arbitration complaint.
“As a result, Claimants – some of whom still are unable to trade their shares as of the date of this filing –lost the opportunity to sell their hard-earned shares for good value and have been left with stock trading at a mere fraction of its I.P.O. price,”The complaint Reads.
A rep for BuzzFeed didn’t immediately respond to a request from for comment on Tuesday.