- The US Securities and Exchange Commission is scrutinizing whether WeWork violated any financial rules, Bloomberg first reported Friday.
- The SEC is reportedly “reviewing” WeWork‘s business and its disclosures to stakeholders in the weeks leading up to its failed attempt to go public.
- Bloomberg reported that the SEC inquiry is preliminary, and that it may not lead to any allegations of wrongdoing.
- Visit Business Insider’s homepage for more stories.
WeWork has drawn the attention of the US Securities and Exchange Commission after its failed attempt to go public, Bloomberg’s Matt Robinson, Robert Schmidt, and Ellen Huet first reported Friday.
The office-sharing startup is facing federal scrutiny of its business and its disclosures to investors in the weeks leading up to its attempted IPO, Bloomberg reported, citing people familiar with the matter.
Bloomberg reports that the SEC inquiry is preliminary, and that it may not lead to any allegations of wrongdoing. It also notes the SEC has been known to “kick the tires” of embattled companies in the public eye.
WeWork cancelled its planned IPO in late September shortly after ousting its chief executive, Adam Neumann, amid concerns from investors that the business wasn’t as profitable as it initially claimed and that Neumann’s controversial leadership style was putting the company’s future in peril.
WeWork was once privately valued at $US47 billion, but that number has since fallen to a fraction of that, leading the company to negotiate a rescue deal with SoftBank that gave the investor control of the startup.
According to Bloomberg, WeWork has retained Wall Street lawyer and former SEC enforcer Andrew Ceresney as it faces scrutiny from the SEC.
Spokespeople for WeWork and the SEC both declined to comment. A spokesperson for Ceresney’s law firm, Debevoise & Plimpton, was not immediately available to comment.
SoftBank has installed Marcelo Claure as WeWork’s new chairman, who will oversee the company along with its two co-CEOs, Sebastian Gunningham and Artie Minson, who replaced Neumann. The company is reportedly seeking a high-profile permanent CEO. Among the candidates being considered is T-Mobile CEO John Legere, according to The Wall Street Journal. CNBC has since reported that Legere is not the leading candidate, citing a source familiar with the matter.
WeWork lost $US1.3 billion in the third quarter as it was trying to go public, according to an earning presentation viewed by Business Insider. The losses are reflective of Neumann’s growth-heavy strategy. WeWork would reportedly have run out of money by mid-November if not for a $US9.5 billion bailout from Softbank.