JPMorgan Chase & Co. and Morgan Stanley to make a combined $120 million on GM’s IPO

Article by Christian A., on August 27, 2010

Sources revealed that from General Motors Co.'s initial public offering, a combined $120 million will be earned by Wall Street banks led by JPMorgan Chase & Co. and Morgan Stanley. But these companies could have made four times more if not for Goldman Sachs Group Inc.

Sources said that in Goldman Sachs' proposal to the US Treasury in May, it had said that it will accept a 0.75% fee.

This is far lower than the 3% that other banks typically charge on the largest IPOs. It is also lower than the 2% rate offered by Bank of America Corp. and other banks that presented to Treasury.

Goldman Sachs, which had recently been named in a fraud lawsuit by federal regulators and has ties to Ford Motor Co., wasn't given a top role in the IPO.

The sources said that banks became upset when the government imposed the fee pitched by Goldman Sachs President Gary Cohn and his five-person team on all underwriters.

Samuel Hayes, a professor emeritus of investment banking at Harvard Business School in Boston, said that he is not at all surprised that the other banks are "furious at Goldman."

He said that they believe that it provided the government with a "real lever" to force down fees on the underwriters. However, he believes that the deal "still has a lot of marquee value." [via autonews]

If you liked the article, share on:

Topics: gm, ipo, united states

Comments

Recommended

November 17 is considered a very special day for Tesla, as this is the day that they revealed the highly anticipated Tesla Semi. But Elon Musk did not think the...
by - November 17, 2017
More details have emerged about the new sixth generation of the BMW M3 just as the German premium practically announced the end of the current-gen 3 Series with the unveiling...
by - November 17, 2017
All is set for Volkswagen’s plans to enter the electric vehicle game, as prompted by the so-called Dieselgate scandal. In fact, the German carmaker has already made a commitment to...
by - November 17, 2017
As BMW has already revealed, the next generation of the BMW M5 (F90) is a four-wheel drive high-performance sedan with overwhelming power output and torque at its disposal. However, it...
by - November 17, 2017
McLaren unveiled a one-off Gold - on - Black 720S at the 2017 Dubai Motor Show which will be on display throughout the entire stretch of this week’s event. The...
by - November 16, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries