San Francisco 49ers CEO Jed York is facing two lawsuits accusing him of insider trading and violations of federal securities laws related to his role on the board Santa Clara-based education company Chegg, the San Francisco Chronicle reported Wednesday.
The suits allege the Chegg board of engaging in “gross mismanagement,” “unjust enrichment” and making false and misleading statements in filings to the SEC. The claims stem from a cheating scandal that the Chegg board is accused of covering up.
The Chronicle reports that the company helped college students cheat on online exams, which played a key role in Chegg’s revenue spike during the pandemic when many college exams were being administered online. The suits claim that, following the pandemic’s end and a return to the classroom for in-person exams, the company’s revenue and stock price plummeted.
York and other board members are accused of unloading Chegg stock without informing investors about the cheating scandal. The suits allege that York made $1.4 million in profit on the sale of 20,000 shares.
“York engaged in insider sales before the fraud was exposed,” one of the lawsuits states. “As a trusted member of the board, he conducted little, if any, oversight of Chegg’s engagement in … the cheating misconduct.”
A Chegg spokesperson denied the allegations in a statement to the Chronicle, while a 49ers spokesperson declined to answer questions from the publication about York and the lawsuits.
York has been on Chegg’s board since 2013, and the company has partnered with the 49ers on providing scholarships to first-generation Bay Area college students. York has been the 49ers CEO for 13 years.
