Former Uber CEO sued for fraud

A prime example of

Three Uber Technologies Inc. investors said a lawsuit against co-founder Travis Kalanick was created to "hold the company hostage" and asked Benchmark, the venture capital firm that brought the suit, to step down from the board. It claims Kalanick deliberately misled investors and found a way to remain involved with the company's decision-making via board seats that Benchmark alleges were "fraudulently procured".

In that vote, Uber's board agreed to the additional seats and also agreed that Kalanick could have the sole power to appoint those new board members.

To view the full article, register now. It is rare for a venture firm to sue the central figure of a valuable portfolio company, and equally unexpected for investors to make a counter-move to push out a fellow investor backing the same company.

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The S&P 500 declined 1.45% to end at 2,438.21, with information technology and financials leading the way lower. The Russian dollar-traded index RTS was down 1.49 percent, and ruble-traded MICEX fell 1.29 percent by midday.

Their Friday letter accused Gurley - who for years was a mentor to Kalanick before a slew of scandals at Uber soured their relationship - of holding Uber "hostage to a public relations disaster by demanding Mr. Kalanick's resignation". Members of Uber's board, not including Kalanick or Benchmark's Matt Cohler, said they were "disappointed that a disagreement between shareholders has resulted in litigation", according to an emailed statement.

Reuters confirmed the email with a source close to one of the investors.

In the investor letter, the three backers asked Benchmark to sell at least 75 percent of its stake and forfeit the board seat. Though one of the most significant private companies in Silicon Valley, Uber has been facing allegations of sexism, misbehavior at the executive level, and others. This is expected to change the way investors deal with start-up founders in the future. "Naturally, we share your concerns about the problems that the Company has confronted in recent months, but we are greatly concerned about the tactics employed by Benchmark to address them, which strike us as ethically dubious and, critically, value-destructive".

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Pishevar, Burkle and Leber - who are not members of the board of directors - said Benchmark's lawsuit harms Uber's valuation, interferes with fundraising efforts and impedes the company's search for a new CEO to replace Kalanick.

The email from the board of directions was signed by Yasir Al-Rumayyan, Ryan Graves, Arianna Huffington, Wan Ling Martello and David Trujillo. At a time when thousands of employees around the world are working hard to serve our drivers and riders and continue to innovate, our priority remains to select Uber's new CEO as quickly as possible.

N. Korea nerves push stocks down for third day
On the economic front, data is expected to show that US consumer prices likely rose in July after being unchanged the prior month. The S&P 500 fell 1 per cent, while the CBOE Volatility Index jumped 32 per cent to bring its three-day rise to 47 per cent.

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