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SEC Looking at Employee Access to Private Tech Financials

When a former Domo employee in December won a legal fight for access to financial statements of the private software company, it highlighted an obscure Delaware law that gives investors the right to financial information of private tech firms in which they hold stock.

That law applies only to Delaware-incorporated companies. But federal securities law gives employees of any U.S. private company a right to detailed financial information, as long as their employer has issued more than $5 million in stock awards in a year. And the Securities and Exchange Commission in recent months has been investigating whether major private tech companies follow the rule. It’s part of an increased focus on private tech securities instigated by the agency’s former chairwoman, Mary Jo White.

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Attorneys described the inquiries as a broad sweep aimed at so-called “unicorn” companies.