StubHub Faces Congressional Probe Over Alleged Fund Ties

The House of Representatives chamber.

One mass-scalping revelation later, the StubHub regulatory scrutiny is intensifying. Now, the company is facing a congressional investigation centering on CEO Eric Baker’s alleged stake in and involvement with a fund dealing in resale tickets.

Representative Robert Garcia, the Committee on Oversight and Government Reform’s ranking member, formally initiated that investigation in a letter to Baker today. Far from coming out of left field, the probe – as well as a class action lawsuit – closely follows and revolves around the above-noted scalping revelation.

DMN previously broke down the multifaceted subject in detail. But the short version is that SEC filings pointed to the exec’s doubling as a part owner in and the managing director of Andro Capital.

And that entity has allegedly benefited from “preferential treatment” en route to selling millions of dollars’ worth of tickets through StubHub, which claims to specialize in “fair and transparent ticketing.” Meanwhile, an Andro affiliate called Colloquy Capital also reportedly has a referral agreement in place with StubHub.

For the ticketing business, there isn’t really a good time for information of this nature to surface. But the details have taken center stage at a particularly inopportune moment.

Just in passing, several states are adopting laws targeting scalping; multiple state AGs are pushing for a Live Nation-Ticketmaster split; BOTS Act cases are ongoing; and would-be World Cup attendees are justifiably irked after spending sizable sums on tickets that never came through.

Enter Rep. Garcia’s letter, which begins by reiterating the state of ticket resale and the StubHub-Andro connection before describing “ethical concerns” about the arrangement.

“Your alleged collusion with these funds also raises serious concerns about whether you have engaged in market manipulation and self dealing at the expense of consumers,” the lawmaker wrote.

Baker now has until August 6th to respond to nine questions and information requests, the first seeking details pertaining to the “listing, pricing, and fulfillment practices StubHub has utilized to sell tickets on behalf of Andro Capital, including any way in which such practices may differ from the services StubHub provides to other ticket resellers.”

“What are StubHub’s policies regarding employees, including executives, using the platform to resell tickets not only as consumers but as brokers? In what ways have those policies changed over time?” one especially interesting question reads.

In terms of what might be the most noteworthy of the information requests, the representative called on Baker to turn over “all emails, correspondence, and records between” him “and StubHub Inc. employees that reference ‘Andro,’ ‘Colloquy,’ or other related party transactions as well as any emails” exchanged with Andro or Colloquy personnel.

From here, it’ll be worth keeping an eye out for the CEO’s answers and, in the bigger picture, seeing whether the investigation fuels concrete regulatory action. More immediately, the possible impact of largescale operational scrutiny on executive-level retention doesn’t necessarily receive a ton of attention.

Previously, Ticketmaster’s London-based CTO exited the company two days before the Live Nation antitrust trial kicked off, for instance. And StubHub is apparently taking steps to retain its own CTO, Artem Yegorov. In late June, Yegorov scored a once-off $4 million retention bonus paid upfront but technically becoming his in its entirety four years from now, an SEC filing shows.