By Business Insurance, Insurance Brokers
Lyft’s stock prices plunged soon after the ride-sharing company went public. According to the Insurance Journal, lawsuits from investors caused the stock price to drop 17 percent just weeks after the initial offering.  For many startups, going public is the dream – but that dream can lead to legal nightmares. As more tech companies are going public with an Initial Public Offering (IPO), they need to brace for the possibility of lawsuits and protect themselves with insurance coverage.

The Problems Goes Beyond Lyft

Lyft’s legal woes have received a fair amount of attention, but it isn’t the only company to face legal challenges soon after going public.

In an article on the recent flood of IPOs, Inc. lists several other companies – Eventbrite, Facebook, Twitter, Snap and Blue Apron – that faced shareholder lawsuits soon after going public. ISS Securities Class Action Services says that IPO-related lawsuits have doubled since 2013.

Bloomberg Law issued another warning: While shareholder litigation against IPOs is increasing, dismissals of IPO-related lawsuits are becoming less common. As a result, companies are more likely to deal with time-consuming and costly legal battles.

Why IPOs Needs Tech Insurance

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Brant Watson
Senior VP
D: 925.295.2506
C: 925.330.1151
brantw@heffins.com