Goldman hit by US inquiry days before $24bn flotation
Saturday 01 May 1999
The inquiry follows complaints from investors that the big securities houses have colluded to fix underwriting fees in initial public offerings (IPOs).
Goldman, whose own IPO is due to be completed on Monday, said yesterday it had received a Justice Department subpoena on Thursday seeking information in connection with "an investigation of an alleged conspiracy among securities underwriters to fix underwriting fees".
Details of the action were disclosed in an amended regulatory filing by Goldman. A total of 25 securities houses have been on the receiving end of investor class actions alleging they consistently levy the same underwriting spread of 7 per cent for IPOs, irrespective of size.
In an unconnected development that also threatened to prove embarrassing at this late stage, it was confirmed yesterday that Noel Dunn, Goldman Sachs' co-head of bond syndication for Europe, had left the company for reasons that were not disclosed.
Yesterday's news came just as all seemed set fair for a highly successful listing. By yesterday, the offering was nearly 10 times subscribed, seemingly guaranteeing that the stock would be priced on Monday near the top of $45 to $55 range announced last month, valuing the bank at almost $24bn.
Goldman refused to comment on what impact, if any, yesterday's development would have. Insiders were playing it down, stressing the investigation was industry wide and not specific to Goldman. However, one said: "It is not brilliant timing."
The final pricing decision is to be announced after the New York market closes on Monday, with the shares being traded for the first time on the New York exchange on Tuesday.
The shares would normally be expected to go to a premium on the first day's trading as retail investors who are not being offered shares in the initial sale pile into the market.
The global roadshow, which included presentations by the bank's managing trio Hank Paulson, John Thornton and John Thain to a select band of investors in London, closed in Chicago yesterday. Seats for the penultimate investors meeting in New York's Grand Ballroom on Thursday had to be rationed, with potential investors turned away at the door.
Ray Soifer, bank analyst at Brown Brothers Harriman, one of the few New York brokerages not in the syndicate, said yesterday: "The stock will probably open strongly, but it is not Goldman.com." Mr Paulson was asked by New York investors whether the bank planned to follow the example of rival Merrill Lynch and buy an online Internet brokerage.
A price of $55 a share will put Goldman on a similar rating to Merrill Lynch and Morgan Stanley, even though objectively the stock should trade at a slight discount to these banks because of the higher proportion of Goldman's earnings which are derived from more volatile trading profits.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Fearne Cotton quits Radio 1 after ten years for 'family and new adventures'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is shot dead
Leonard Nimoy dead: Star Trek actor dies after suffering lung disease
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin, says West should 'abandon zero-sum mentality'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...