[ad_1]
Multibillion-dollar cap table management firm Carta faces backlash after admitting it misused confidential customer information to target investors in startup Linear on behalf of its private stock exchange business CartaX. confronting.
CEO Henry Ward said this was an isolated incident involving a single employee who violated company protocols, and only three companies were affected. But emails and marketing materials sent by Carta, viewed by his Business Insider, raise some questions about their characteristics.
An unsolicited email sent by a Carta employee late last year offered shares in a number of startups on CartaX, including unicorn startups such as Airtable, Deel, Navan, Brex, and Flexport. It was. At least two of the companies on the list viewed by Business Insider also use cap table software from Carta, which helps companies track their shareholders.
The Carta employee said in an email that sellers are already lined up with all of the companies in question, and they are obligated to trade at the stated price, often up to 50% compared to that company’s maximum price. It says that it corresponds to a discount of more than %. Recent reviews.
A spokesperson for one of the companies contacted by Business Insider said they were shocked to learn their company’s stock was for sale, and that Ward had said it was a precondition for the sale. Said not to have opted into the CartaX market. The spokesperson requested anonymity because they were discussing private matters related to the company’s finances.
Another company, which also requested anonymity, confirmed that it uses Carta’s cap table software.
Other companies contacted by BI either declined to comment or did not respond.
The controversy over the conflation of Carta’s cap table with its brokerage business centers on the trove of sensitive information that companies entrust to Carta, including shareholder contact information, stock prices and trading data. This information could be used by CartaX to identify and solicit potential sellers of startup stock, creating a conflict of interest for companies that claim to be trusted information custodians while also pursuing transaction brokerage fees. There is a possibility.
Although Ward said the misuse of customer information was a one-off incident, many people are not convinced. Adam Struck, managing partner at Struck Capital, which has more than 150 portfolio companies on Carta’s platform, said it’s hard to believe that CartaX employees have access to this valuable information and don’t use it. talk.
“If these controls weren’t in place, we’re going to operate on the assumption that literally every sell-side broker at CartaX is using this information to their advantage,” he told Insider.
This is not the first time the issue of conflicts of interest at CartaX has been raised. Lisa Whitaker, former Head of Corporate Compliance at Carta, said: She said she was fired in 2021. For raising concerns about conflicts of interest and attempting to put guardrails in place to prevent exactly this type of situation.
Andrea Ramali, former head of liquidity solutions at Carta who helped launch CartaX, agreed. I was kicked out of the company after I raised my concerns. Regarding legal issues regarding the platform.
[ad_2]
Source link
