Early Uber Investor Sues Ex-CEO Travis Kalanick for Alleged Fraud

12 August, 2017, 15:03 | Author: Terri Saunders
  • Uber founder Travis Kalanick stepped down from his chief executive position in June

Nevertheless, it is Gurley's resignation from the board that the trio of dissenting shareholders demanded Friday, likewise asking that Benchmark sell off at least three-quarters of its 13 percent stake in the company, estimated to be worth more than $8 billion. But in a statement, Kalanick's spokesperson said the lawsuit is an attempt to deprive Kalanick of his rights as an Uber founder and shareholder. They are Kalanick's support for a harassing and abusive management style, the theft of trade secrets by a founder of Otto, an autonomous truck technology company that was acquired by Uber, the existence of the Grayball software to shut regulators out of the ride-sharing service, and the charge that Kalanick had received and read the medical records of a woman in India that complained of being raped by an Uber driver. This is expected to change the way investors deal with start-up founders in the future. Gurley resigned from Uber's board in June after he grew increasingly unhappy with Kalanick's behaviour, according to sources close to the situation. If Benchmark gets its way that board vote would be invalidated and Kalanick would be forced off the Uber board. These scandals have led to halting of the Uber's self-driving auto after the engineer at the center of its development left the company.

Benchmark's suit, filed in Delaware Chancery Court, seeks to have Kalanick removed as a director by reversing the board-expansion decision. The lawsuit accuses Kalanick of knowingly misleading the board to agreeing to increase the board members to 11 from eight, with Kalanick exclusively involved in filling the extra seats. Notably, Kalanick is one of the board members on the search committee for a new CEO, which may be one of the reasons nobody has stepped up to take the job. The other two remain vacant. With this statement and now the lawsuit, Ben Narasin a venture capitalist in the Silicon Valley is convinced that Kalanick "is done".

In the latest development, Sherpa Capital's Shervin Pishevar, Yucaipa Companies' Ron Burkle and Maverick's Adam Leber have started a revolt against Benchmark.

PayPal Holdings, Inc. (PYPL) closed at $59.67 in the last trading session
It turned negative, as 86 investors sold BMY shares while 529 reduced holdings. 99 funds opened positions while 342 raised stakes. Logan Capital Management Inc.'s holdings in Bristol-Myers Squibb were worth $497,000 as of its most recent filing with the SEC.


The lawsuit, which was first reported by Axios news website, alleges that Kalanick is scheming to regain power at Uber by "packing the board" with his own confidants.

The suit, which calls on a DE court to bar Kalanick from tinkering with the Uber board in any way, argued that Kalanick saw his resignation as unavoidable and finagled to "pack the board with loyal allies in an attempt to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO".

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