Meg Whitman received & flipped hot IPOs, resigns from Goldman Sachs board
eBay CEO Meg Whitman has resigned from the Goldman Sachs board amidst the controversy surrounding the legal yet seemingly inappropriate assigning of hot IPO stocks to private banking clients of the Bank that also did investment banking work for those clients' companies. Whitman received stock in over 100 IPOs which she flipped mostly, and eBay in turn has paid over $8M in fees since 1996 to Goldman according to this Wall Street Journal story (subscription required):
Ms. Whitman wasn't alone in receiving favored treatment on Goldman-managed IPOs: Other recipients included Tyco International Ltd.'s former CEO Dennis Kozlowski, Global Crossing Ltd.'s former CEO Leo Hindery and others, according to congressional investigators. EBay co-founders Pierre Omidyar and Jeffrey Skoll also received shares in Goldman deals. But Ms. Whitman, along with Yahoo Inc. founder Jerry Yang, received shares in dozens more deals than most other executives.
..."While reasonable people can debate whether giving private banking clients preferred access to IPO shares is fair or whether policies regarding such transactions should be reformed, there is no question about the legality of this practice today," Ms. Whitman wrote in a memo to eBay employees in October. "Let me be absolutely clear about this -- the practice of private banking clients participating in the opportunity to buy shares of new public companies is perfectly legal and quite common during thriving IPO markets. When I bought and then sold my shares, I followed the law as well as Goldman Sachs' policies regarding these transactions."
What is it with multi-millionaires, even billionaires, feeling the need to augment their fortune by a piddly 0.2% thru a practice that may be legal but so, so unnecessary -- look at Martha Stewart and her troubles over a few hundred thousand dollars worth of stock...and now millions, if not billions, in losses for her shareholders and her as this controversy has caused her company's stock price to plummet.
The proceeds of Ms. Whitman's sales of shares from the IPOs totaled $1.78 million, a relatively small fraction of a fortune that was once estimated at more than $1 billion. Her wealth is now estimated at between $750 million and $800 million....