In the early days at BuzzFeed, employees labored with relatively low pay and dreams of IPO day, when their stock options would make them whole. This is the common arrangement in many start-ups. Terms like SPAC, stock transfer agent, and arbitration probably did not figure into employees’ thinking at the time, but they do now. The BuzzFeed IPO in December was a hot mess, and as the share price plummeted, many employees were essentially locked out of trading due to a "clerical error," reports Axios. Now at least 77 current and former employees have filed two complaints with the American Arbitration Association, seeking compensatory damages of more than $8.7 million, the New York Times reported last week.
Those early employees had Class B shares, which must be converted to Class A before they can be traded on the open market. Doing so requires paperwork and takes several days, and employees say they weren't given adequate time to do so ahead of the IPO. Months later, some shareholders are still unable to cash out. The complaints name BuzzFeed executives and the chairman of Continental Stock Transfer, a major player in the world of SPAC mergers. In preparation for its IPO, BuzzFeed announced plans to merge with a SPAC called 890 Fifth Avenue Partners, which in turn raised over $250 million from investors—but not really. All but $16 million was pulled before the deal closed, signaling investors weren't feeling too bullish about BuzzFeed's prospects. The complaints argue BuzzFeed execs should have reconsidered the IPO as a result, but they charged ahead anyway. BZFD is currently worth about $610 million, down from $1.15 billion at the end of its first day of trading. (Read more BuzzFeed stories.)