Snap Shares Dropped From S&P 500 on Concern Over Voting Rights

Paterniano Del Favero
Agosto 1, 2017

The move will take effect Tuesday Aug. 1, S&P Dow Jones Indices LLC said in a statement, although existing companies in S&P indices will be "grandfathered" in, meaning listing such as Warren Buffett's Berkshire Hathaway Inc. will not be affected by the rule changes.

S&P is hoping to bar companies who discount the voices of their shareholders through limited voting rights and "other governance issues" the company said in a news release.

The S&P 500 will not list the tech company, or any other with multiple share classes, following hot on the heels of the FTSE Russell making changes.

That often runs up against the interest of leaders of high-growth, often technology companies that resist coming to public markets and offering full voting rights out of fear they will lose control of their companies.

Snap's $3.4 billion March IPO was the third-largest ever for a USA tech company but some investors were taken aback by the company's unusual decision to offer new investors a class of common stock with no voting rights.

S&P Global said companies with such shareholdings will not be eligible for the S&P Composite 1500 and its component indices such as the S&P 500 from today. The decision follows a similar judgement last week from FTSE Russell, a division of the London Stock Exchange Group, which dropped Snap shares from its indices following a consultation with its clients.

The decision likely means that funds like $243 billion SPDR S&P 500 ETF will not buy Snap any time soon.

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