As this video from Bloomberg Law shows, Chancellor Leo E. Strine Jr. of the Delaware Court of Chancery did not hide the misgivings he had this past February with pipeline operator Kinder Morgan’s $21.1 billion acquisition of fellow gas-pipeline owner El Paso Corporation. In a 34-page decision, Strine used terms such as “disturbing,” “troubling,” and “tainted” to describe the role that investment banking firm Goldman Sachs Group, Inc. had in the deal. “Goldman’s claim that it was capable of putting aside its $4 billion investment in Kinder Morgan when advising El Paso on its strategic options is hard to square with the record evidence demonstrating the lengths to which Goldman would go to secure an advisory fee of $20 million from El Paso — a fraction of the dollar size of its Kinder Morgan investment — in connection with the merger,” Strine wrote.
At that time, Strine he did not rule out the possibility of plaintiff investors pursuing their case and winning monetary damages. On December 3, 2012, Strine approved a $110 million settlement to a class action lawsuit filed by investors who alleged the sale of El Paso was riddled with conflicts of interest. Reuters reported that Strine called the settlement a “substantial achievement” for shareholders who accused El Paso’s CEO, Douglass Foshee, and deal adviser Goldman Sachs of “having an interest in holding down the purchase price.” As part of the settlement, Goldman Sachs gave up its $20 million advisory fee.
Reuters said, “The case may have a lasting impact on Wall Street dealmaking by making advisers and bankers more sensitive to disclosing conflicts of interest when arranging mergers and takeovers.” There is more information about securities and shareholder rights in class action litigation available on our website. If you believe that a company has misled you and other investors about a company’s stock value or the financial condition of the business, complete the form on this page or contact our firm at (800) 687-3333 to let our class action attorneys review your case.
Stanley Iola, LLP – Class action lawyers