EBay CEO Meg
Whitman, Chairman Pierre Omidyar and former vice president Jeffrey
Skoll have agreed to pay $3 million to the auction site to settle a
shareholder lawsuit that accused them of profiting from Initial
Public Offerings (IPO) in breach of their fiduciary
duties.29 Apr 2005
The dispute is one of many
US suits that concern "spinning" – where investment banks offered the chance to buy allocations of shares in company flotations to top executives of their clients. The practice was common, and legal, until 2003.Omidyar, Whitman and Skoll were accused of personally profiting from shares being offered in start-ups by investment bank Goldman Sachs between 1999 and 2001. The lawsuit claimed they "flipped" the shares, selling them quickly – often within hours of the
IPO – in order to make a substantial profit.EBay shareholders sued because they said that the eBay executives should not have used the allocations for personal gain; rather, they said shares should have been bought by eBay itself.Omidyar, Whitman and Skoll denied the allegations, but under the settlement, which still has to be approved by a Delaware court, they will pay $3.395 million to eBay. Goldman Sachs will also make a payment of $395,000.