2003-04-28 sec-litreleases pdf 14 KB 3,650 chars

SEC v. : 03 Civ. 2944 (WHP)

Exhibit of Federal Court Approves Settlement of SEC Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking
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summary

Goldman, Sachs & Co. settled SEC charges of facilitating fraudulent IPO allocations by paying a $300 million penalty to create a distribution fund compensating investors who bought shares in 360networks, Exodus, WorldCom, AT&T, and Global Crossing during specified periods between March 2000 and June 2001, without admitting guilt.

paragraph

Goldman, Sachs & Co. agreed to pay a $300 million penalty to resolve SEC allegations of fraudulent IPO allocation practices, favoring select clients with hot shares in exchange for excessive commissions and undisclosed kickbacks. The SEC’s Final Judgment established a Distribution Fund to compensate eligible investors who purchased equity securities in 360networks, Exodus, WorldCom, AT&T, and Global Crossing during designated periods between March 2000 and June 2001. The court’s order identifying the securities and purchase windows was explicitly administrative, not a judicial finding of fraud, and Goldman did not admit liability as part of the settlement.

narrative

Goldman, Sachs & Co. resolved civil charges brought by the U.S. Securities and Exchange Commission related to alleged fraudulent allocation practices in initial public offerings during the late 1990s and early 2000s. The SEC accused Goldman of favoring certain clients with access to high-demand IPO shares in exchange for excessive commissions and undisclosed kickbacks, involving five companies: 360networks, Exodus Communications, WorldCom, AT&T, and Global Crossing. A Final Judgment issued on October 31, 2003, required Goldman to pay a $300 million penalty, part of which formed a Distribution Fund to compensate investors who purchased the affected securities during specific timeframes between March 2000 and June 2001. The court’s order precisely defined the equity securities and purchase windows solely for administrative purposes, emphasizing that it was not a judicial or Commission finding of fraud. Goldman did not admit guilt but agreed to the settlement and distribution plan as a resolution to the enforcement action. The Distribution Fund Administrator was tasked with equitably and cost-effectively returning funds to eligible recipients who met the defined criteria. The case concluded without litigation, preserving Goldman’s legal position while addressing investor harm through a structured compensation mechanism.

Enriched metadata

Scheme
unregistered-securities (100%)
Court
Southern District of New York
Classified unregistered-securities(confidence 100%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →
Parties
Securities and Exchange CommissionGoldman Sachs & Co.
Keywords
distribution funddistributionequity securitiessecurities questionquestion relevantfundfund planfinalsecuritiesequityrelevant periodperiod purchasequestionrelevantpurchase

Extracted insights

Entities 2
  • company creation of a distribution fund
  • person final judgment
Triples 7
  • The Court Signed Final Judgment
  • Section II of the Final Judgment Calls for Creation of a Distribution Fund
  • Section V.A of the Final Judgment Requires Distribution Fund Administrator to formulate and administer a Distribution Fund Plan
  • Section V.C.1 of the Final Judgment Defines Eligible Distribution Fund Recipient
  • Section V.C.1 of the Final Judgment Requires Identification of the 'equity securities in question' and the 'relevant period of purchase' for each such equity security
  • The Court Orders Equity Securities in Question and Relevant Periods of Purchase
  • The identification Is for the purpose of Facilitating the efficient administration of the Distribution Fund Plan
PDF
SEC v. : 03 Civ. 2944 (WHP) · Source
Text layers
Extracted body text (3,650c) 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________ 
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 
                                                Plaintiff,                                    :            Civil            Action            No.            
        : 
                        -against-                                                            :            03            Civ.            2944            (WHP)            
        : 
GOLDMAN, SACHS & CO.,    : 
        : 
    Defendant.   : 
________________________________________________: 
 
ORDER REGARDING DISTRIBUTION FUND PLAN 
 
 On October 31, 2003, the Court signed a Final Judgment as to Defendant Goldman, 
Sachs & Co. (“Final Judgment”).  Section II of the Final Judgment calls for the creation of a 
Distribution Fund, which consists of Defendant’s Federal Payment plus any income and interest 
earned thereon.
1
  Under Section V.A of the Final Judgment, “[t]he Distribution Fund 
Administrator shall formulate and administer a Distribution Fund Plan ... intended to provide for 
the equitable, cost-effective distribution of funds to Eligible Distribution Fund Recipients.”  
Under Section V.C.1 of the Final Judgment, to be an Eligible Distribution Fund Recipient, a 
person must have purchased “equity securities in question” through Defendant during the 
“relevant period of purchase.”  Also under Section V.C.1, “[i]dentification of the ‘equity 
securities in question’ and the ‘relevant period of purchase’ for each such equity security will be 
set forth (solely for the purpose of administering the Distribution Fund Plan) in a further order of 
the Court.” 
                                                
 
1
 All defined terms in the Final Judgment apply to this Order. 

 Accordingly, IT IS HEREBY ORDERED that the “equity securities in question” and the 
“relevant period of purchase” for each such equity security, as those terms are used in Section 
V.C.1 of the Final Judgment, are as follows: 
 
Equity Securities in Question   Relevant Periods of Purchase
 360networks, Inc.    April 27, 2001 – May 15, 2001 
 Exodus Communications Inc.   June 11, 2001 – June 20, 2001 
 WorldCom Inc.    Aug. 7, 2000 – Dec. 5, 2000 
                                                                                    April            26,            2001            –            June            30,            2001            
 AT&T Corp.     July 26, 2000 –  Dec. 19, 2000 
                                                                                    April            25,            2001            –            June            30,            2001            
 Global Crossing Ltd.    March 21, 2000 – June 19, 2000 
 
The identification of “equity securities in question” and “relevant periods of purchase” made 
herein is solely for the purpose of facilitating the efficient administration of the Distribution 
Fund Plan, is not a judicial or Commission finding, and is not intended to have precedential 
effect in other actions. 
            SO            ORDERED.            
 
Dated: New York, New York 
            October            31,            2003            
 
 
                                                                        ________________________________            
                                                                        WILLIAM            H.            PAULEY            III            
                                                                        UNITED            STATES            DISTRICT            JUDGE            
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OCR text (2,729c · tika · 95% conf) 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________ 
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 
    Plaintiff,   : Civil Action No. 
        : 
  -against-     : 03 Civ. 2944 (WHP) 
        : 
GOLDMAN, SACHS & CO.,    : 
        : 
    Defendant.   : 
________________________________________________: 
 

ORDER REGARDING DISTRIBUTION FUND PLAN 
 
 On October 31, 2003, the Court signed a Final Judgment as to Defendant Goldman, 

Sachs & Co. (“Final Judgment”).  Section II of the Final Judgment calls for the creation of a 

Distribution Fund, which consists of Defendant’s Federal Payment plus any income and interest 

earned thereon.1  Under Section V.A of the Final Judgment, “[t]he Distribution Fund 

Administrator shall formulate and administer a Distribution Fund Plan … intended to provide for 

the equitable, cost-effective distribution of funds to Eligible Distribution Fund Recipients.”  

Under Section V.C.1 of the Final Judgment, to be an Eligible Distribution Fund Recipient, a 

person must have purchased “equity securities in question” through Defendant during the 

“relevant period of purchase.”  Also under Section V.C.1, “[i]dentification of the ‘equity 

securities in question’ and the ‘relevant period of purchase’ for each such equity security will be 

set forth (solely for the purpose of administering the Distribution Fund Plan) in a further order of 

the Court.” 

                                                 
1 All defined terms in the Final Judgment apply to this Order. 



 Accordingly, IT IS HEREBY ORDERED that the “equity securities in question” and the 

“relevant period of purchase” for each such equity security, as those terms are used in Section 

V.C.1 of the Final Judgment, are as follows: 

 Equity Securities in Question   Relevant Periods of Purchase
 360networks, Inc.    April 27, 2001 – May 15, 2001 
 Exodus Communications Inc.   June 11, 2001 – June 20, 2001 
 WorldCom Inc.    Aug. 7, 2000 – Dec. 5, 2000 
       April 26, 2001 – June 30, 2001 
 AT&T Corp.     July 26, 2000 –  Dec. 19, 2000 
       April 25, 2001 – June 30, 2001 
 Global Crossing Ltd.    March 21, 2000 – June 19, 2000 
 
The identification of “equity securities in question” and “relevant periods of purchase” made 

herein is solely for the purpose of facilitating the efficient administration of the Distribution 

Fund Plan, is not a judicial or Commission finding, and is not intended to have precedential 

effect in other actions. 

 SO ORDERED. 

 
Dated: New York, New York 
 October 31, 2003 
 
 
      ________________________________ 
      WILLIAM H. PAULEY III 
      UNITED STATES DISTRICT JUDGE 

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