More than 70 BuzzFeed employees sued the company, alleging they weren’t allowed to sell their shares at a higher price after the initial public offering (IPO).

BuzzFeed went public in December last year. Just days later, the company’s shares fell drastically and employees say they were unable to sell their shares until the price fell nearly 60%, unless $5 per share. Some workers say they are still unable to trade their shares at all.

The two claims, filed with the American Arbitration Association, represent a total of 77 employees who collectively owned more than 900,000 shares of BuzzFeed when the company went public, The New York Times reported Tuesday. They are claiming $8.7 million in damages.

BuzzFeed Team Members celebrate BuzzFeed Inc. Nasdaq Listing Day on December 6, 2021 in New York City.
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“BuzzFeed prioritized communication with current and former employees over the past year to provide them with the information they needed to manage their capital,” a BuzzFeed representative said in a statement to the Timesadding: “It is unfortunate that the share price has fallen, but these claims are unsubstantiated and we intend to vigorously refute them.”

BuzzFeed was founded in 2006 by Jonah Peretti, who is named in the lawsuit. According to claims, journalists, web developers, and publishers joined BuzzFeed when it was a startup. Employees say they accepted low wages in exchange for stock options and Peretti promoted the goal of taking the company public.

BuzzFeed announced in June 2013 that it would merge with a SPAC (Special Purpose Acquisition Company) called 890 Fifth Avenue Partners to take the company public. The deal was worth about $1.4 billion and is currently worth about a third of that.

During the merger, approximately 94% of the funds raised by SPAC, or more than $250 million, were withdrawn by investors, leaving the company with $16 million. Following the investor pullout, employees say BuzzFeed had a responsibility to reevaluate IPO plans.

After the IPO, workers say they received unclear instructions on how to trade their shares. Employees were eligible to sell as soon as they filed the necessary documents before the debut, but did not have enough time to complete the application before the company went public, also after the drop in value, allege the employees.

“As a result, the plaintiffs – some of whom are unable to trade their shares as of the date of this filing – lost the opportunity to sell their hard-earned shares at a good price and were left with shares trading at a mere fraction of their value. IPO price,” one of the complaints read.

Newsweek contacted BuzzFeed but did not receive a response in time for publication.