Figure AI Cracks Down on Secondary Market Brokers
▼ Summary
– Figure AI has taken legal action against brokers trading its shares without authorization, issuing cease-and-desist letters to halt unauthorized stock marketing.
– The company is pursuing a $1.5 billion funding round at a $39.5 billion valuation, significantly higher than its previous $2.6 billion valuation, with concerns that unauthorized trading could undermine fundraising efforts.
– Figure AI requires board approval for secondary trading and plans continued legal action against unauthorized brokers to maintain control over valuation and investor relations.
– Brokers argue that CEOs resist secondary sales to avoid price discrepancies affecting future funding, though secondary trading might boost interest in primary offerings if valuations are justified.
– The dispute arises amid scrutiny of Figure’s business dealings, including its partnership with BMW, with the company disputing inaccurate media coverage and threatening legal action.
Figure AI has taken aggressive legal action against secondary market brokers attempting to trade its shares without authorization, marking a significant move in the ongoing tension between private companies and unofficial stock trading platforms. The robotics startup recently issued cease-and-desist letters to at least two brokers, demanding they halt marketing of its stock—a practice the company claims to have consistently enforced when discovering unauthorized transactions.
The crackdown follows reports that Figure is pursuing a $1.5 billion funding round at a staggering $39.5 billion valuation, a dramatic leap from its $2.6 billion valuation just months earlier. According to sources familiar with the matter, the letters were sent after brokers allegedly facilitated share sales below this new target valuation, potentially undermining the company’s fundraising efforts.
A Figure AI spokesperson confirmed the company’s stance, stating that secondary trading requires explicit board approval and that unauthorized brokers would continue to face legal pushback. Private companies like Figure often restrict share sales to maintain control over valuation and investor relations, making secondary markets—where early investors seek liquidity before an IPO—a contentious space.
Brokers involved in these transactions speculate that CEOs resist secondary sales to avoid price discrepancies that could complicate future funding rounds. Sim Desai, CEO of secondary marketplace Hiive, suggests that while some view secondary trading as a threat, it could actually stimulate interest in primary offerings—if the valuation is justified. “If shares aren’t selling, the problem isn’t market access—it’s pricing,” Desai noted.
The dispute coincides with heightened scrutiny of Figure’s business dealings, including its partnership with BMW. The company has publicly disputed media coverage it deems inaccurate, even threatening legal action in one instance.
As Figure navigates its next funding phase, questions linger about whether early investors will find exit opportunities or if the company’s strict stance will tighten liquidity further. For now, the clash underscores the delicate balance private firms must strike between growth ambitions and shareholder expectations.
(Source: TechCrunch)
