NEW YORK, April 28, 2005 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP ("Pomerantz") (www.pomerantzlaw.com) announced today that the parties have reached a tentative settlement in In re eBay, Inc. Shareholders Litigation, a derivative action brought by shareholders on behalf of eBay (Nasdaq:EBAY) in Delaware Chancery Court. The settlement calls for the payment to eBay of $3 million by Meg Whitman, Pierre Omidyar, Jeffrey Skoll and Robert Kagle, who are officers/directors/controlling stockholders of eBay, and a payment to eBay of $395,000 by Goldman Sachs Group, eBay's investment banking firm. Pomerantz is co-lead counsel for the plaintiffs, and H. Adam Prussin was the Pomerantz partner in charge of the case.
The case concerns "spinning," the now-banned practice by which investment banking firms would dole out to favorite clients the lucrative opportunity to purchase shares in initial public offerings they were underwriting. The complaint alleges that Goldman allotted such opportunities to senior eBay executives in order to secure their position as eBay's investment banker, and that these executives should have offered that opportunity to eBay itself.
A few months ago, Delaware Chancellor Chandler issued an opinion denying defendants' motion to dismiss the action, holding that the receipt of IPO allocations, under these circumstances, could be a breach of fiduciary duty, and that the directors of eBay were too beholden to the defendants to make an impartial decision on whether to pursue the action.
The total settlement payment of $3,395,000 represents almost all of the profits the individual defendants have actually realized from the purchase and sale of the IPO shares. The proposed settlement is ultimately subject to court approval, after eBay's stockholders are given the opportunity to express their views on the fairness of the settlement.