Pomerantz Haudek Block Grossman & Gross LLP announced a tentative settlement has been reached in In re eBay, Inc. Shareholders Litigation, a derivative action brought by shareholders on behalf of eBay in Delaware Chancery Court. The law firm says the settlement calls for the payment to eBay of $3 million by Meg Whitman, Pierre Omidyar, Jeffrey Skoll and Robert Kagle, who are officers/directors/controlling stockholders of eBay, and a payment to eBay of $395,000 by Goldman Sachs Group, eBay's investment banking firm.

According to the press release, the case concerns "spinning," the now-banned practice by which investment banking firms would dole out to favorite clients the lucrative opportunity to purchase shares in initial public offerings they were underwriting. The complaint alleges that Goldman allotted such opportunities to senior eBay executives in order to secure their position as eBay's investment banker, and that these executives should have offered that opportunity to eBay itself.

A few months ago, Delaware Chancellor Chandler issued an opinion denying defendants' motion to dismiss the action, holding that the receipt of IPO allocations, under these circumstances, could be a breach of fiduciary duty, and that the directors of eBay were too beholden to the defendants to make an impartial decision on whether to pursue the action.

The total settlement payment of $3,395,000 represents almost all of the profits the individual defendants have actually realized from the purchase and sale of the IPO shares, according to the press release. The proposed settlement is ultimately subject to court approval, after eBay's stockholders are given the opportunity to express their views on the fairness of the settlement.

eBay also issued a press release in which it said in part, "In the agreement, the defendants deny that any of the allegations are true."

eBay also said that under the proposed settlement, a fund of $3.395 million will be set up by eBay Chairman Pierre Omidyar, eBay CEO Meg Whitman, former eBay vice president Jeffrey Skoll, and Goldman Sachs. The net proceeds of the fund will be provided to eBay. eBay plans to give one-half of the net proceeds to the charities Boys & Girls Clubs of Northern California and Appleseed. Once the Delaware court enters final judgment, a motion will be filed to dismiss two related California cases, which have been stayed since 2003.

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