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Jed York, the CEO of the San Francisco 49ers, is currently facing two legal actions after being accused of engaging in insider trading and violating federal securities laws in connection with his position on the board of Chegg, an educational company based in Santa Clara. The San Francisco Chronicle reported this development on Wednesday.
The lawsuits assert that the Chegg board was involved in "gross mismanagement," "unjust enrichment," and the dissemination of false and misleading information in submissions to the Securities and Exchange Commission (SEC).
These allegations stem from a scandal involving academic cheating, which the Chegg board is purported to have concealed.
According to the Chronicle, the company allegedly facilitated academic dishonesty among college students by aiding them in cheating on online exams.
This behavior contributed significantly to Chegg's increase in revenue during the pandemic when numerous college exams were istered online. However, as in-person exams resumed following the pandemic, the company's revenue and stock value reportedly plummeted.
The legal suits claim that York and other of the board sold Chegg stock without disclosing the cheating scandal to investors. The allegations further state that York personally gained $1.4 million in profits from the sale of 20,000 shares.
"York engaged in insider sales before the fraud was exposed," a lawsuits states.
"As a trusted member of the board, he conducted little, if any, oversight of Chegg's engagement in ... the cheating misconduct."
In response to the accusations, a spokesperson for Chegg has refuted the claims in a statement provided to the Chronicle. On the other hand, a representative for the San Francisco 49ers declined to respond to inquiries from the publication regarding York and the ongoing lawsuits.