WeWork facing SEC inquiry over possible rule violations
WeWork is under scrutiny from the U.S. Securities and Exchange Commission (SEC) to examine whether it violated financial rules in the run-up to its abandoned initial public offering, citing two people with knowledge of the matter, Bloomberg reported on Friday.
The SEC’s inquiry is in its preliminary stage and may not lead to any allegations of wrongdoing. Bloomberg could not determine whether specific WeWork business decisions or transactions prompted the review.
WeWork shelved its IPO in the month of September after investors grew wary of its losses, business model and corporate governance which had forced former Chief Executive Officer and co-founder Adam Neumann to resign.
Neumann and other WeWork officials are also being sued by the minority shareholders who place accusations on the company’s board of directors of breaching its fiduciary duties. According to the report, the regulator’s enforcement division is reviewing WeWork’s businesses and its disclosures to investors after media reports showed certain conflicts of interest and the company’s fundraising.
WeWork has retained a top Wall Street lawyer named Andrew Ceresney, who previously headed the SEC enforcement unit. WeWork and the SEC declined to comment. Earlier this week, The We Company, which owns WeWork, said that the net losses in the third quarter more than doubled to $1.25 billion.
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This story has been edited by BH staff and is published from a syndicated field.