[mmaunder]

The insiders are 144 days into their lockup period of 180 days according to the S1 filing. Morgan Stanley and their preferred clients have made their money and are moving on. So there's not much motivation among heavyweights to keep marketing the stock and there is some paranoia about the looming lock-up expiration.

http://www.sec.gov/Archives/edgar/data/1490281/0001047469110...

[rabidsnail]

Why do companies set the lockup period to be the same for all employees? Do they want a sudden dip in the stock price?

[mmaunder]

The lock-up period is set by the investment bank, in this case Morgan Stanley. Just to be clear, a lock-up period is not required by the SEC. But all investment banks who underwrite IPO's require them to prevent insiders dumping the stock on the first day and hurting the banks clients who the bank convinced to buy the stock.

In general lockup periods are 180 days but I have seen 90 days in rare cases.

I'd imagine giving preferred employees a shorter lock-up would raise hell. Having said that, if you read the S1 it sounds like Morgan Stanley and Groupon have the right to extend executive lock-up by 18 additional days without notice and employee lock-up by 34 days. So there is some differentiation between stockholders.

[kingcub]

Why is that lockup not 34 days for execs and 18 days for employees?

[yuvadam]

Simple, because the execs are the one who negotiate the lockup, not the employees.

[suking]

My guess is because execs have a much higher % of stock.

[rabidsnail]

I don't think too many people would object to the lockup period being based on join date. Ex: 30 days minus one day for each month you've been working at the company.

[InclinedPlane]

I see that SOX is working quite well in preventing companies with dubious business fundamentals filing IPOs and then running on investment fumes for long enough for key insiders to cash in before they collapse.

Right?

[tyrelb]

I'm not sure what SOX ("Auditor Protection Act") has to do with preventing pump & dumps...

[ojbyrne]

It's weird that that seems to say that the lockup period is from the date of that perspectus, rather than the date of the IPO (which was only 3 weeks ago).

[pbreit]

Yes, it's from the date of the prospectus which was 11/7 and essentially the date of the IPO. You may be thinking of the series of S-1s which came out earlier.

[pbreit]

The effect of the lockup expiration is generally overblown. Since it's known information, the impact is priced in days or weeks before the actual day. While the expiration results in a temporary imbalance, the stock usually closes at a reasonable price.

[unreal37]

The lockup ends 180 days from the date of the prospectus not the date of the IPO. The prospectus is dated June 2, so the lockup ends a week from today. Watch out GRPN.

[pbreit]

I haven't seen this particular agreement but in general the clock starts ticking on the day of the IPO. Basing it on the date of the prospectus makes no sense. There's no guarantee that the IPO will even happen within 180 days.

[fan]

In this case, it's right under the section entitled "Lock Up Agreement", and seems to be indeed after the /prospectus date/ and not the IPO:

"...during the period ending 180 days after the date of this prospectus..."

[pbreit]

Right. I think we were both confusing the S-1 and the Prospectus. The Prospectus is dated 11/7 so it's correct that the lock-up begins on 11/7 when the stock starts trading, not on 6/2 when the first S-1 was filed.