Ridesharing company Lyft agreed to pay a $10 million penalty to settle allegations by the Securities and Exchange Commission (SEC) it failed to disclose a pre-initial public offering (IPO) stock deal that netted a member of its board millions of dollars.

Lyft agreed to cease and desist from further violations in reaching settlement, the SEC announced in a press release Monday. The stock deal involved approximately $424 million worth of private shares, roughly 2.6 percent of the company prior to its 2019 IPO.

The details: In March 2019, an unnamed Lyft board director set up a deal for a shareholder to sell 7.7 million shares to a special purpose vehicle. The investment adviser who arranged the deal was affiliated with the board director, the SEC said in its order.

To avoid a conflict of interest, the director proposed the shareholder sell their stake in a private transaction, with the director leaving the board upon completion, per the order.

Lyft approved the sale and thus was a participant in the transaction. The director was a related person because of his role and the compensation he received in structuring and negotiating the deal, the SEC found.

Lyft failed to disclose this information in its Form 10-K for 2019.

“The federal securities laws required Lyft to disclose that a director profited from a transaction in which Lyft itself was a participant,” said Sheldon Pollock, associate regional director of the SEC’s New York regional office, in the agency’s release. “We remain vigilant in ensuring investors are not deprived of critical information about transactions occurring close to a company’s [IPO].”

Lyft did not respond to a request for comment. The company reached settlement without admitting or denying the SEC’s findings.