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Way back in 2011, Benchmark Capital was one of Uber's early and prominent investors. And according to court filings, Benchmark currently holds approximately 13 percent of Uber's stock, equating to 20 percent of Uber's voting power. Unfortunately for Uber and its deposed CEO Travis Kalanick, that court filing is a fraud lawsuit, filed by Benchmark in Delaware state court yesterday.
The lawsuit involves that voting power, centering on Kalanick's alleged misrepresentations in stacking Uber's board of directors in order to solidify his position, possibly with an eye on a return to the company. You can see the full lawsuit below.
Grab Your Board
Benchmark is accusing Kalanick of "fraud, breaches of fiduciary duty, and breaches of contractual obligations," all in a bid to "entrench himself on Uber's Board of Directors and increase his power over Uber for his own selfish ends." The suit contends Kalanick tried to "pack Uber's Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO -- all to the detriment of Uber's stockholders, employees, driver-partners, and customers."
Inappropriate and Unethical
Considering the alleged board-packing occurred in June 2016 and Kalanick didn't resign until June 2017, this would be some very forward thinking from the former CEO. But Benchmark reminisces on Uber's very bad year and suggests Kalanick knew all along it may not end well for him:
Unknown to Benchmark at the time, in obtaining control over the three new Board seats for his personal benefit, Kalanick intentionally concealed and failed to disclose his gross mismanagement and other misconduct at Uber. These matters included, among others, Kalanick's personal involvement in causing Uber to acquire a self-driving vehicle start-up that, according to a confidential report not disclosed to Benchmark at the time (the "Stroz Report"), allegedly harbored trade secrets stolen from a competitor; an Uber executive's alleged theft of the medical records of a woman who was raped by her Uber driver in India; a pervasive culture of gender discrimination and sexual harassment that ultimately prompted an investigation by the former U.S. Attorney General Eric Holder; and a host of other inappropriate and unethical directives issued by Kalanick.
Essentially, Benchmark is saying Kalanick knew he could be fired and wanted some friendly faces on the board who might facilitate an eventual return, hence the fraud. You can reach their full lawsuit below:
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