Benchmark Capital to sue former Uber CEO on Fraud

According to Axios, Benchmark Capital, one of Uber’s first early investors and one of Uber’s largest shareholder, is suing former CEO Travis Kalanick on claims of fraud.

Kalanick stepped down from the position of CEO back in June due to his poor performance which angered many investors and Benchmark. The venture capital firm holds a position on the board of directors, want Kalanick out of the board.

The lawsuit claims that Kalanick made “material misstatements” and hid important information about the company from the board of directors in order to hold more power. it specifically states that, "Kalanick intentionally concealed and failed to disclose his gross mismanagement and other misconduct." and also "Kalanick's personal involvement in…an Uber executive's alleged theft of the medical records of a woman who was raped by her Uber driver in India."

The suit revolves around the June 2016 decision to expand the size of Uber's board of voting directors from 8 to 11, with Kalanick having the sole right to designate those seats. Kalanick would later name himself to one of those seats following his resignation, since his prior board seat was reserved for the company's CEO, according to Axios.

Benchmark claims that Kalanick tricked Benchmark into opening those seats and says it would have never allowed that situation to happen if they knew about Kalanick’s "gross mismanagement and other misconduct at Uber", which the suit also specifies "pervasive gender discrimination and sexual harassment.”

Also Benchmark stated that Kalanick wrote as part of his resignation agreement that the two empty board seats would be remain untouched and only changed by approval of the entire board. According to the suit, Kalanick has not been willing to arrange those changes through a voting agreement.Benchmark wants Kalanick off the board of directors and also remove the three board seats that previously had increased the boards seating from 8 to 11. It also is asking the court for a preliminary injunction against Kalanick's ongoing involvement in Uber board affairs which, if approved, would remove him from the CEO search process, according to Axios.This is what Kalanick’s spokesperson had to say in regards to the lawsuit:"The lawsuit is completely without merit and riddled with lies and false allegations. This is continued evidence of Benchmark acting in its own best interests contrary to the interests of Uber, its employees and its other shareholders. Benchmark's lawsuit is a transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder and to silence his voice regarding the management of the company he helped create. Travis will continue to act in the interests of Uber and all of its stakeholders and is confident that these entirely baseless claims will be rejected."

Benchmark declined to comment when Axios tried to contact the company.

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