Published: Fri, August 11, 2017
Science | By Boyd Webster

Early investor sues Uber co-founder Travis Kalanick for fraud

Early investor sues Uber co-founder Travis Kalanick for fraud

Kalanick was trying to "pack Uber's board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO", Benchmark said in the lawsuit.

Benchmark wants Kalanick removed from the board and hopes to reverse the decision to create the three new openings on the panel.

But, Benchmark contends that it would never have given Kalanick those seats had it better understood his "gross mismanagement and other misconduct at Uber", which Benchmark claims included "pervasive gender discrimination and sexual harassment".

The company is looking for a new chief executive after Kalanick was pressured to step down, following a series of business embarrassments for Uber.

The suit revolves around the June 2016 vote to increase the size of the board's voting directors from eight to 11 seats, with Kalanick having the sole right to designate those seats.

Investor Benchmark Capital is chafing at the idea, however, and filed suit against its former colleague in DE on Thursday for fraud and breach of contract.

It says that the court should invalidate an agreement from 2016 that let him pick three board members, which would remove the former CEO as the company searches for his replacement.

Benchmark accuses Kalanick of withholding material information about all of these episodes past year during a vote on the board of directors.

Earlier today, Uber's first employee and original CEO, Ryan Graves, stepped down as the company's senior vice president of global operations, but announced that he will maintain his board position there. The complaint says Kalanick still holds about a 10-percent stake in the company.

Benchmark's lawsuit marks a rare instance of a Silicon Valley investor suing a central figure at one of its own start-ups. Basically, Benchmark is accusing Kalanick of pulling strings to try and stack the board in his favor, and eventually orchestrate a triumphant return as Uber's CEO.

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