Tuesday 19 November 2019 10:08 am

New York State Attorney General reportedly investigating Wework

Embattled office space firm Wework is reportedly being investigated by the New York State Attorney General (NYAG).

The issues NYAG is examining include whether Wework founder and former chief executive Adam Neumann indulged in self-dealing to enrich himself, Reuters reported.

Read more: Wework losses ballooned to $1.3bn in quarter before failed float

The investigation comes amid mounting woes for the co-working space giant, which agreed to a $9.5bn (£7.3bn) rescue package from tech investment titan Softbank last month after shelving a planned initial public offering (IPO).


Wework confirmed it had been contacted by the office of the NYAG, Letitia James.

“We received an inquiry from the office of the New York state attorney general and are cooperating in the matter,” a Wework spokesperson said.

A spokesperson for Neumann declined to comment.

Self-dealing is when a person with fiduciary responsibility behaves in a manner that takes advantage of their position and acts in their own interests, rather than in the best interest of their clients or shareholders.

Neumann, who was ousted as head of Wework last month in a deal netting him $1.7bn, had bought properties that he then leased back to Wework.

He also borrowed against his own stake in the business, and had charged it almost $6m to use the word “We”, which Neumann trademarked. He has since agreed to return the cash from the use of “We”.

A spokesperson for the NYAG declined Reuters’ request for comment.


Wework is expected to lay off thousands of employees this week in an attempt to stem burgeoning losses.

According to an email from new executive chairman Marcel Claure, job cuts will be announced later this week in areas that do not support the company’s core goals, Reuters reported.

The New York Times reported on Sunday that Wework, which has around 12,500 direct employees, is planning to cut 4,000 jobs.

Read more: Wework faces US markets regulator inquiry after failed flotation

The company burned through $1.3bn in the third quarter as it expanded in anticipation of its now-scrapped IPO, according to an earnings presentation.

The US markets regulator is investigating whether Wework broke the law as it prepared for the planned listing.

Main image credit: Getty

Share


Tags: