WeWork CEO Adam Neumann is on track to become the next Elon Musk. That might sound like a compliment. Trust me – it’s not. | REUTERS / Eduardo Munoz
By CCN Markets: The last thing an investor wants to read in an IPO prospectus is a warning that the company’s CEO may have committed an SEC violation – even an itsy-bitsy one. But that’s the case with WeWork co-founder and CEO Adam Neumann, who is on track to become the next Elon Musk for all the wrong reasons.
Let me explain.
The company’s S-1 prospectus buries a “risk factor” deep within its contents regarding prohibited interviews Adam Neumann gave a few months ago.
The SEC has something called “quiet period,” which extends from the date a company files a registration statement for selling shares until the company says that statement is officially effective.
During that period, company representatives are not allowed to issue any public statements regarding the company’s value or forecasts. However, buried on page 49 in the prospectus, WeWork admits that Adam Neumann gave interviews to Axios and Business Insider – both of which took place during the quiet period.
Does this matter? How serious is it?
With regards to SEC regulations, this is more a violation of the letter of the law than its spirit. The point is management is not supposed to hype its stock and induce investors.