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The Goldman Sachs Group has agreed to settle a shareholder lawsuit bydonating $10 million to a Ford Motor Co. charitable trust.Goldman Sachs will pay an additional $3.4 million to the attorneys forplaintiffs Roger W. and Kay Berger, according to court documents. The$3.4million is expected to cover all of the plaintiffs’ expenses and costs.Should the attorney fees and costs in Berger v. Ford total less than$3.4million when the settlement is approved, any surplus funds will go toFordMotor Co.’s charitable trust, court papers said. According to court papers, the plaintiffs claimed that Ford Motor Co.’schairman and chief executive officer, William Clay Ford Jr., improperlypurchased 400,000 shares of Goldman Sachs’ 1999 initial public offering.AndGoldman Sachs, they have asserted, engaged in IPO “spinning” by settingtheshares aside for Ford.A Wall Street practice that has come under fire in recent years, IPO”spinning” occurs when underwriters allocate desirable IPO shares forcorporate executives the underwriters hope will send them business. The opportunity to profit from purchasing the numerous Goldman Sachssharesat a bargain price belonged to Ford Motor Co., and not to the vehiclemanufacturer’s chairman, the plaintiffs asserted in their complaint.Theirderivative suit names Ford, a number of the company’s directors andGoldmanSachs as defendants. Ford Motor Co. is a nominal defendant. According to a Goldman Sachs spokesman, the company “categoricallydeniesany wrongdoing in connection with the allocation of shares in its IPO toMr.Ford. He was precisely the type of long-term, stable investor anycompanywould desire, and an independent committee of Ford directors long agoconcluded that there was no basis for legal action, including againstGoldman Sachs.” Berger was settled and filed in the Court of Chancery Nov. 3. More thanamonth of mediation led to the agreement, court papers said.Collectively denying any wrongdoing, the defendants agreed to settle thematter because they wished to “avoid the substantial expense,inconvenienceand distraction of continued litigation,” the settlement agreementstated. When Ford purchased the 400,000 shares of Goldman Sachs on May 3, 1999,thefinance corporation was one of several firms that handled Ford MotorCo.’sinvestment banking needs, court documents said.Ford paid $53 for each of the 400,000 shares, according to courtdocuments.On May 4, 1999, Goldman Sachs opened for trading at $76 per share, roseto ahigh of $77.25 and closed trading at $70.38, the complaint alleges. THE COMPLAINT AND SETTLEMENT In their complaint, the plaintiffs contended that Ford could have made$6.95million to $9.7 million by immediately selling his Goldman Sachs stockduring its first day of trading.”By accepting 400,000 Goldman shares at the offering price of $53 pershare,without the approval of the [Ford Motor] Company’s Board of Directors…Mr. Ford improperly took advantage of his corporate office and of thecompany’s business relationship with Goldman. In so doing, Mr. Fordbreachedhis fiduciary duties to the company and its stockholders,” theplaintiffsalleged in their complaint. But according to court papers, Ford did not “flip” his Goldman Sachsshares.Rather, he held on to them until February 2003, when, in the wake of thecontroversy over their purchase, he sold the stock and donated theproceedsto charity. The plaintiffs also claimed that the director defendants did not respondproperly to the plaintiffs’ demand for an investigation and correctiveaction with respect to the IPO purchase. The board of directors shouldhavenegotiated with Ford to secure his unrealized gains and accrueddividendsfor the company, and should have sought divestment of Ford’s GoldmanSachsstock, the plaintiffs said in their complaint.According to the complaint, Goldman Sachs “knowingly participated in Mr.Ford’s breach of fiduciary duty and deprived the [Ford Motor] Co. of avaluable investment opportunity” by setting aside the 400,000 shares forFord. Defendants disagreed. They asserted in the settlement agreement thatFordhad purchased the Goldman Sachs stock with his own funds, purely as apersonal investment. Further, the defendants argued, Goldman Sachs’stockwas allocated to Ford because the executive was the type of long-terminvestor the company sought, and not as an inducement for futurebusinessfrom Ford Motor Co. In the settlement agreement, the defendants asserted that Ford played norole in deciding where Ford Motor Co. sent its investment bankingbusiness.”The settlement achieves an outstanding result by relieving the [FordMotor]Co. of the obligation of making at least $10 million of an $85 millioncharitable contribution to the Ford Motor Co. Fund (the Ford Fund), aMichigan not-for-profit corporation performing charitable acts, to whichthecompany’s board of directors had committed [the $85 million] for thecalendar year 2004,” the settlement agreement stated. The Delaware Law Weekly was unable to reach Ford Motor Co.representativesprior to press time. Plaintiffs’ attorney Andre Bouchard of Bouchard Margules & Friedlanderwashandling another trial at press time and could not be reached forcomment.

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