More news today in the “no conflict, no interest” vein. Goldman Sachs is paying $395,000 to settle a lawsuit that it allocated lucrative IPO shares to well-placed executives at eBay in order to curry favor and secure future business from them. Goldman delivered hard-to-get IPO shares to several executives, including chief executive Meg Whitman, even as eBay selected Goldman to advise eBay on its acquisition of PayPal in 2001, generating Goldman more than $8 million in fees. Whitman got shares in 100 IPOs, and made $1.78 million.
But that’s kind of old fare. More interesting is what’s going on now, namely Goldman’s activities over at the NYSE. For Roger McNamee, a well-regarded Silicon Valley investor, and someone well-placed enough to know a bit about conflicts of interest, Goldman’s existing reach on Wall Street is “like a story from the days when JP Morgan ruled Wall Street”…
To recap, the New York Stock Exchange last week said it would acquire Archipelago Holdings, an electronic stock and derivatives exchange.
But as McNamee points out:
o The investment banking firm of Goldman Sachs & Co. is the largest owner of Archipelago.
o Goldman also accounts for a huge percentage of the trading volume on Archipelago.
o Goldmanï¿½s Spear Leeds & Kellogg division is the largest special firm on the NYSE.
o Former Goldman executive John Thain is now CEO of the NYSE.
o Last but not least, Goldman acted as financial advisor to both the exchange and Archipelago.
McNamee concludes: …”itï¿½s hard to imagine that it could possibly have found a situation more filled with conflicts than this.”
With Goldman’s chief rival for top-dog status in the IPO investment banking world, Morgan Stanley, struggling to remain in one piece (there’s word the company may be considering split in two), Goldman is beginning to appear stronger and more influential than ever.
UPDATE: The NYT weighs in.