49ers CEO Jed York accused of insider trading and covering up a college exam cheating scandal
San Francisco 49ers CEO Jed York is facing two lawsuits stemming from his role as a board member for the online educational company, Chegg Inc., according to the San Francisco Chronicle.
Two shareholders' lawsuits allege York and other members of the board covered up an online college exam cheating scandal during the COVID-19 pandemic and also engaged in insider trading. The scheme, colloquially known as "chegging," allowed college students to find the answers to test questions online using one of Chegg's services. The company's stock soared during the pandemic when colleges switched to virtual classrooms but plummeted once colleges resumed in-person classes.
The lawsuit claims the Chegg board gave false and misleading statements to the U.S. Securities and Exchange Commission when the cheating scandal was discovered and insinuated that they perpetuated the practice. The company's stock price reached as high as $113.96 a share on Feb. 8, 2021, before it fell to $24.25 a share by November, per Yahoo Finance. It hasn't reached at least $30 a share since April 2022 and currently sits at less than $11 a share.
This is where the insider trading allegations come into play.
York and Chegg CEO Dan Rosensweig are also accused of allegedly dumping company stock at the height of its market price before the scandal was discovered and without informing investors of an impending crash. The lawsuit claims York made $1.4 million after he sold 20,000 shares.
“York engaged in insider sales before the fraud was exposed,” one lawsuit claims. “As a trusted member of the board, he conducted little, if any, oversight of Chegg’s engagement in ... the cheating misconduct.
“His insider sales demonstrate his motive in facilitating and participating in the scheme."
York, whose parents own the 49ers, has worked for the team since he was hired as vice president in 2005. He became president and CEO of the 49ers in 2008 when his parents transitioned to co-chairs. York joined the board of Chegg in 2013.
“The recent securities-related lawsuits against Chegg, and in certain cases its board of directors, are without merit and Chegg is vigorously defending itself," a company spokesperson wrote in a statement. "Chegg takes academic integrity very seriously and has invested significant resources to protect it. Chegg has been helping millions of students learn and thrive for many years, including during the pandemic, creating a transformative digital learning platform to improve outcomes.”
San Francisco 49ers spokesperson Brian Brokaw did not acknowledge the lawsuits in a statement to the Chronicle.
“The 49ers are proud of the work we accomplished with Chegg to provide scholarships for first-generation students," he wrote.
The 49ers partnered with Chegg in 2019 to hand out $100,000 in scholarships to first-generation college students in the Bay Area.
