Two members of the House of Representatives asked the Securities and Exchange Commission to investigate Palantir Technologies Inc.’s disclosures and governance ahead of the controversial software company’s Wednesday direct listing.
Rep. Alexandria Ocasio-Cortez, D-N.Y., and Jesus “Chuy” Garcia, D-Ill., wrote a letter Sept. 17 requesting that the SEC investigate several elements of Palantir’s
filing for a direct listing and request further disclosure. Specifically, the two members of Congress wanted more information on the company’s work with the U.S. Department of Health and Human Services on coronavirus data.
“Palantir must provide greater transparency to potential investors about the data protections or lack thereof associated with its government contracts, and further information about the U.S. and non-U.S. government entities for which it is working on data related to the COVID-19 crisis,” the representatives wrote. “This is of paramount importance to investors and the public, as Palantir Chief Operating Office Shyam Sankar recently characterized the company’s work for multiple governments to manage and process data in response to the COVID-19 crisis as the new ‘driving thrust of the company.’”
“I was not aware of those requests,” Sankar said in an interview with MarketWatch on Wednesday immediately after Palantir’s shares began trading. He added that “part of this process was a pretty sensitive back and forth with the SEC” on a variety of topics, which led to 11 total versions of the company’s S-1 filing with the SEC. Three of those versions were publicly posted after the letter was sent, one on Sept. 18 and two on Sept. 21, when Palantir added language about its unique share structure and then removed it after a TechCrunch report detailed the new disclosures.
For more: Five things to know about the Palantir non-IPO
The lawmakers also wanted information on any stake held by the CIA’s In-Q-Tel venture-capital arm, which provided early funding for the company; disclosures on Palantir’s work with governments, specifically mentioning Qatar; and more information on board member Alexander Moore, a former Palantir employee who is listed as an “independent” director on a six-member board that includes all three Palantir co-founders and is required to eventually have a majority of independent directors. They also expressed concern that Palantir was allowed to file as an “emerging growth company,” which allows for fewer disclosures.
A spokeswoman for Ocasio-Cortez said Wednesday that the SEC has not responded to the letter. The SEC has not responded to MarketWatch’s request for comment.
Mijente, an immigration advocacy group, expressed support for the efforts by Ocasio-Cortez and Garcia.
“The company’s work with Immigration and Customs Enforcement is its most pernicious, but Palantir’s issues are manifold: contracts with possibly corrupt and authoritarian foreign governments, a corporate board with no meaningful independence, and unknown privacy safeguards when handling sensitive personal health information, to name a few,” said Jacinta Gonzalez, senior campaign organizer at Mijente, in a statement Wednesday. She added that the group is “eager to find out why the agency has not” announced an investigation into the issues the representatives raised.
Palantir shares began trading Wednesday at $10 a share, above the reference price of $7.25 and the opening price that executives reportedly expected. The stock closed at $9.50, 31% higher than the reference price.