Goldman Settles Over IPO Sale to Bill Ford

Goldman Sachs Group Inc. agreed Wednesday to pay $13.4 million to settle a lawsuit claiming that the company unfairly offered shares in its initial public offering to Ford Motor Co.’s chief executive.

William Clay Ford Jr. bought 400,000 shares in Goldman’s 1999 initial public offering for $53 each. In a lawsuit settled Wednesday, shareholders in Ford said his acceptance of the shares in the IPO was a “usurpation of an opportunity that belonged to the company.”

The shareholders said Goldman “aided and abetted” Bill Ford’s gain of a corporate opportunity to buy the shares. In the settlement, Goldman Sachs and Bill Ford, 47, denied any wrongdoing or liability.

The shareholders said Goldman Sachs sold shares to the Ford executive as an inducement for future business. Goldman Sachs denied the charges, saying in court papers that the CEO “played no role” at Ford Motor “in awarding investment banking, underwriting or other business to Goldman or other investment banking firms.”

Goldman Sachs will pay $10 million to charity and as much as $3.4 million in fees and expenses to shareholder attorneys, according to court papers. The settlement requires court approval.

Columbia University professor John C. Coffee noted that the settlement was “outside the normal framework” of litigation, “which is supposed to produce a recovery for injured plaintiffs and not charities.”

Coffee added, “There is something unsettling and disquieting about a settlement that benefits the defendant and the plaintiffs’ attorneys and not the plaintiff shareholders.”

The shareholders who filed the lawsuit didn’t return calls for comment.