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Firms Examine Ties To Goldman After IPO Scandal

Dec 23, 2002 | USA Today

IVillage says it will consider its founder's personal ties with Goldman Sachs in deciding the company's future investment-banking assignments, the latest corporate reaction to congressional investigators' recent disclosures of possible conflicts of interest between prominent executives and one of Wall Street's leading firms.

Co-founder and editor-in-chief Nancy Evans received shares in Goldman Sachs' initial public offering in 1999, and the women's media firm does business with Goldman. In the future, ''This would be recognized -- but there are other factors that go into choosing our bankers to avoid conflicts of interest,'' spokesman Carl Fischer says.

Prompted by shareholder complaints, Ford Motor and Disney have each appointed committees of their boards to review their corporate and CEO ties to the firm.

EBay CEO Meg Whitman resigned from the board of Goldman Sachs last week amid allegations that her acceptance of more than 100 Goldman-managed IPOs, as well as Goldman's own IPO, influenced eBay in giving $8 million in fees to Goldman. But in doing so, Whitman admitted no breach of ethics.

EBay spokesman Henry Gomez said Whitman, who sold many of the IPO shares for quick profit, received access to the shares as part of her ''private banking relationship'' with Goldman.

''We, like all companies, are reviewing all our policies to make sure we are better than we have been,'' said Gomez, but quickly added that Whitman, as well as Chairman Pierre Omidyar, did not violate eBay's policies and received clearance from eBay's legal department to avail themselves of the IPO windfalls.

Yahoo co-founder Jerry Yang personally reaped benefits of over 100 Goldman-led IPOs, while Yahoo used Goldman as an investment banker. Yahoo said Friday, ''There is no reason to believe our officers violated any laws or prevailing standards.''

Ford officials won't say if Bill Ford's acceptance of 400,000 Goldman IPO shares in 1999, when he was non-executive chairman, would violate Ford's policy of restricting gifts from suppliers to employees, such as theater tickets, to a $50 value. Ford's Goldman shares show an $8 million gain. As CEO, Ford is now an employee and held to that standard.

New York attorney Robert Curry, whose letters to Ford and Disney on a shareholder's behalf led to the inquiries, says more complaints are possible.

Curry says he has asked Qwest Communications to look at whether former CEO Joseph Nacchio improperly benefited from shares in Goldman's IPO. He also wants to know if Nacchio and board member Phil Anschutz profited from IPO shares allocated by Salomon Smith Barney, which was doing business with Qwest. The company says it is reviewing the letter.

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