Palantir insiders locked out of trading due to software glitch

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  • Palantir insiders were temporarily unable to sell shares Wednesday due to an issue with Morgan Stanley’s trading software, CNBC first reported and Morgan Stanley confirmed to Business Insider.
  • The data-mining company went public Wednesday morning via a direct listing at $10 per share, but took a page from the traditional IPO process by having a “lock-up” period for existing investors.
  • Palantir still allowed those investors to sell up to 20% of their shares during the lock-up, but according to CNBC, some initially couldn’t take advantage of it because of a software glitch.
  • A Morgan Stanley spokesperson told Business Insider the company “experienced slowness that may have resulted in delayed logins into our system” but that its call centers were able to execute trades “at all times.”
  • Palantir’s stock jumped as much as 14% per share in early hours, but dropped again later in the day.
  • Visit Business Insider’s homepage for more stories.

Palantir went public on Wednesday, giving existing investors a chance to offload some of their shares. But some were temporarily unable to do via Morgan Stanley’s trading platform because of a software glitch, CNBC first reported and Morgan Stanley confirmed to Business Insider.

While Palantir used a direct listing process (DLP) instead of a traditional initial public offering (IPO), it took a page from the IPO process by setting a “lock-up” period for existing investors such as employees, founders, and venture capitalists to limit some volatility.

Still, it allowed those insiders to sell up to 20% of their shares immediately upon the stock’s debut Wednesday morning.

But according to CNBC, some current and former employees couldn’t get in on the initial action because Morgan Stanley’s Shareworks trading platform, through which they were supposed to be able to sell shares, wasn’t functioning properly.

“We experienced slowness that may have resulted in delayed logins into our system. At all times our call centers were available to execute trades. We will work through any issue that is brought to our attention and ensure that no employee will be disadvantaged,” a Morgan Stanley spokesperson told Business Insider.

The employees told CNBC the software eventually started to function just a few hours before the market closed.

Palantir’s stock opened on the New York Stock Exchange at $10 per share —  roughly 38% above the $7.25 reference price set by the exchange on Tuesday — and jumped as much as 14% before closing at $9.50, down 9.5%.

The historically secretive data-mining company has received scrutiny over its direct listing from Rep. Alexandria Ocasio-Cortez, who wrote a letter to the US Securities and Exchange Commission in mid-September asking the agency to investigate Palantir over its failure to fully disclose information regarding its business practices, omissions that could lead to material risks for future investors and national security issues as it begins trading.

Disclosure: Palantir Technologies CEO Alexander Karp is a member of Axel Springer’s shareholder committee. Axel Springer owns Insider Inc, Business Insider’s parent company.

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