Lyft agrees to $25 million settlement with shareholders over security allegations

“Inaccuracies and omissions” ahead of its IPO include failure to disclose the “existential risk” presented by reports of drivers assaulting passengers on the platform, as well as security concerns over its bike-sharing business.

The preliminary settlement agreement, detailed in a filing Thursday, is pending approval by Judge Haywood S. Gilliam, Jr. of the Northern District of California. Notably, the money would go to shareholders, not directly to people who were victimized and reported such incidents.

“This settlement resolves a shareholder class action lawsuit related to statements from Lyft’s initial public offering and its financial impact on investors — these are not claims related to security on the platform,” it said. declared Lyft (LYFT) spokeswoman Gabriela Condarco-Quesada in a statement to CNN Business Thursday evening.

Shareholders also took issue with Lyft’s claims about market share growth ahead of its IPO.

The lawsuit, first filed in 2019 after the company went public, alleged a disconnect between Lyft’s public image and its handling of sexual assault incidents.

“Lyft has cultivated a brand image as a safer and more socially responsible ridesharing alternative, with a focus on appealing to female riders,” Thursday’s filing said. “After the IPO, however, dozens of reports surfaced that Lyft drivers had sexually assaulted their passengers. Dozens of individuals filed complaints against Lyft for sexual misconduct by drivers in the months following the Initial Public Offering.”

Shareholders say Lyft did not disclose this in its IPO listing documents.

Lyft finally released its first-ever safety report in October 2021 in which it revealed it had received 4,158 reports of sexual assaults on its platform from 2017 to 2019. The disclosure came more than three years after Lyft and its rival. Uber (UBER) committed to posting security reports disclosing incidents of sexual assault and abuse on their platforms after a CNN Survey 2018 in the problem. Lyft said the vast majority of trips (or 99%) reported no security incidents for the period included in its report.
Both companies continue to face a number of lawsuits from individuals over their alleged security incidents on their platforms. A small number of claims Lyft faces are expected to go to trial in a coordinated proceeding later this year.

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