As JPMorgan Chase works its way through its own legal morass, it can look to Goldman Sachs for an example of how long litigation can haunt a bank.
The New York Times reports that Goldman is poised to leave behind a long-running lawsuit over the 1999 initial public offering of eToys, an online toy retailer whose rise and fall became a symbol of the dotcom boom and bust.
A federal judge on Thursday approved a settlement of the matter, in which the investment bank will pay $7.5m to eToys creditors.
Though many of the specters of the dotcom frenzy have dissipated - Kozmo.com and Pets.com among them - eToys has lingered in legal system, including in courts in New York and Delaware.
At issue is the company’s I.P.O., which Goldman priced at $20. Shares in eToys leaped well above that in their first day of trading, closing at $77.
Critics of the process, including creditors, have argued that the Goldman-led offering enriched special clients of the firm at the expense of the retailer, which could have used the money to build much-needed infrastructure to keep up with demand.
Hit the link below to access the complete New York Times article: