Uber shareholder sues over ‘illicit business practices’ – CNET

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Uber co-founder and former CEO Travis Kalanick is accused of misleading investors.

James Martin/CNET

Uber is facing another lawsuit. This time it’s being brought by a small shareholder in the ride-hailing company.

A retirement fund called Irving Firemen’s Relief & Retirement, based in Texas, invested about $2 million in Uber in 2016. It’s saying Uber allegedly covered up “a variety of illicit business tactics,” which has threatened its long-term prospects and therefore hurt shareholders. The lawsuit was filed in the US District Court for the Northern District of California.

“For the last several years defendants viewed themselves as above the law,” said Darren Robbins, partner at Robbins Geller, which is representing Irving Firemen’s Relief & Retirement Fund. “As the truth about Uber’s unlawful practices has been revealed, the company’s reputation, business prospects and value have eroded and investors have suffered significant harm.”

Uber didn’t respond to a request for comment.

The company, founded in 2009, managed to upend the taxi industry and become the world’s most valuable startup, with a valuation of $68 billion. Over the course of the last few years, Uber quickly became one of the biggest ride-hailing services on the planet, with a no-apologies attitude and notoriously aggressive CEO Travis Kalanick. Though this approach helped the company grow, it also brought on a slew of scandals and lawsuits.

Over the past couple of years, Uber has been sued by everyone from its drivers to passengers to employees to high-level investors. That’s not to mention the massive lawsuit brought by Waymo, the self-driving car unit of Google’s parent company Alphabet, over allegedly stolen self-driving car technology. It’s also facing three federal investigations, including ones by the Justice Department and the Federal Bureau of Investigation.

The suit brought by Irving Firemen’s Relief & Retirement Fund claims Uber courted billions of dollars from private investors while knowingly misleading them about the status of the company’s growth, revenue and competition. The suit also claims Uber didn’t mention to investors that it possibly broke the law when it designed software caled Greyball to evade police and created a program called Hell to spy on its rival Lyft. Along with Uber, the fund is also suing Kalanick.

“The company’s vaunted corporate culture was revealed in truth to consist of a toxic hotbed of misogyny, sexual discrimination, and disregard for the law that threatened the company’s reputation, business and prospects,” reads the complaint.

Because Uber didn’t disclose this information, the suit says, investors could stand to lose billions on their investments. Lawyers for the retirement fund are seeking class-action status for the suit, which could then extend to all of Uber’s investors.

After Uber’s significant unraveling, which led to its board of directors forcing Kalanick to resign in June, the company pledged to clean up its act. It launched a “180 Days of Change” initiative to make things better for drivers, promised to address workplace discrimination and hired new CEO Dara Khosrowshahi.

Some changes are already being seen. For example, after London’s transportation regulator refused to renew the company’s operating license last week, Khosrowshahi was conciliatory — rather than taking Uber’s typical defensive stance.

“While the impulse may be to say that this is unfair, one of the lessons I’ve learned over time is that change comes from self-reflection,” Khosrowshahi wrote in an email to staff on Friday. “So it’s worth examining how we got here. The truth is that there is a high cost to a bad reputation.”

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