A group of investors have filed a class action lawsuit against WeWork — the latest of a series of disputes stemming from the company’s failed public offering.
In a complaint filed Wednesday in San Francisco’s federal court, the investors claimed WeWork executives overhyped the company’s business plan in order to sell stock, Bloomberg reports.
Further, they said the executives minimized losses as “strategic investment spending that would lay the foundation for profitability.”
“As would later be revealed, WeWork was engaged in profligate spending in a reckless bid for growth at all costs — not in a manner designed to sustainably grow its business, but rather to induce capital raises from investors at ever higher valuations,” the complaint said.
WeWork has reportedly not commented on the suit.
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SoftBank, which is also named as a defendant, was recently hit with a lawsuit from WeWork’s founder, Adam Neumann, after SoftBank pulled out of a deal to buy $3 billion worth of WeWork shares from investors — a potential windfall for Neumann.
SoftBank said that it was scrapping the deal because of “multiple, new and significant pending criminal and civil investigations,” which changed conditions ahead of the deal’s April 1 closing date. But Neumann rejected that, claiming that Softbank CEO Masayoshi Son had been “secretly taking actions to undermine” the agreement for some time.
Neumann said in the suit that he “put his trust in [SoftBank and the Vision Fund] to be stewards of WeWork, which he — and thousands of others — had worked so hard to build.” Neumann alleged that he, unlike SoftBank, had “upheld [his] end of the bargain.”
[Bloomberg] — Sylvia Varnham O’Regan