Litigation over Goldman Sachs Group’s role in the spectacular rise and fall of eToys Inc ended on Thursday with court approval of a $7.5 million settlement.
The online toy seller’s IPO in 1999 became a poster child for dot-com era excess. The stock quadrupled at first. Two years later eToys was in bankruptcy.
The case was brought by creditors of eToys, who alleged that Goldman Sachs underpriced the stock to ensure a huge pop in price on the first day of trading.
The litigation slowly worked through multiple appeals in New York state courts but never went to trial. The two sides struck a settlement earlier this year, on the eve of arguments in New York’s Court of Appeals to overturn a dismissal of the case.
The eToys IPO, at the time, was the fifth-biggest debut in history.
— Reuters