BuzzFeed has been accused by 44 current and former employees of causing workers to lose the opportunity to sell their shares at a higher price as the company made its debut on the New York Stock Exchange (NYSE).
The New York Times reported Tuesday that the group has filed a lawsuit with the American Arbitration Association seeking at least $4.6 million in damages.
According to the claim, BuzzFeed botched instructing workers on how to trade their shares immediately after the company went public in December 2021.
Shortly after BuzzFeed, Inc. became the first digital media property to hit the market, its stock price plummeted. 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 of the workers say they were not able to trade shares at all.
“BuzzFeed prioritized communication with former and current employees last year to provide them with the information they needed to manage their equity,” a BuzzFeed rep said in a statement Tuesday to the NYT, 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. Days before the initial public offering, which coincided with its acquisition of Complex Media and merger with special purpose acquisition company (SPAC) 890 5th Avenue Partners, writers walked out amid stalled contract talks between BuzzFeed News Union and BuzzFeed management.
Meanwhile, investors pulled out nearly all of the $250 million raised via the special purpose acquisition company (SPAC), bringing the company down to just $16 million. As a result, workers said in the complaint, BuzzFeed had a responsibility to reevaluate its plans to go 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 representative for BuzzFeed declined to comment for this story.