In a private email to her employees Friday, University trustee and eBay CEO Meg Whitman '77 affirmed congressional allegations that she got access to and made quick profits on initial public offerings, but denied any wrongdoing.
The House Financial Services Committee alleged last week that Whitman and 22 other executives gained preferred access to the IPOs because of their firms' ties to investment banks.
Legal experts say these allegations could land her in court, though they say it will be hard to prove any crime. Federal, state and securities authorities have vowed to investigate.
The email gives the first glimpse into Whitman's thoughts about last week's allegations. The House did not allege the practice was illegal, but said average investors buying IPOs later in the game usually lost money.
According to the House report, Whitman profited because of eBay's banking relationship with Goldman Sachs.
Whitman called the allegations "painful" in the email and denied any correlation between her personal investments and her decisions as eBay's CEO.
"A fundamental tenet of my life is to conduct my personal and professional activities under the highest ethical standards," she said.
She said it was common for private banking clients to get access to IPOs and emphasized that her actions were legal.
Some experts disagree.
Jim Cox, a securities law professor at Duke University, said what the House alleges "clearly is illegal" because it was a quid pro quo.
Securities experts say, however, it could be difficult to show in court that executives got access in exchange for using the services of banks.
"IPO allocations were traditionally done and given to significant or good clients," said Mark Astarita, a securities lawyer at the firm Beam & Astarita in New York. "A quid pro quo is going to be hard to prove."
Cox said the offer to buy the IPOs probably originated at the banks.
They "waved [the possibility of getting IPOs] under the noses of CEOs and other executives," he said.
The executives, including Whitman, may still end up in court. If new facts show signs of a quid pro quo, lawsuits become more probable, said Henry Hu, a securities law professor at the University of Texas.
But he said the House has not yet provided facts to support a quid pro quo. Still, there are other ways to bring these executives to court.
Stockholders could challenge Whitman and other executives for exploiting their positions for personal profit, he said. Stockholders could claim executives violated their "fiduciary duty," Hu said.
It is not likely, though, that any of these executives will be handcuffed and put before television cameras, as have other business executives charged with insider trading or other abuses, Cox said.
"It doesn't have the political cache," he said.
Whitman said in the message that she welcomes a debate on whether rich clients should get preferred access to IPOs.
"Given my experience yesterday, I plan to participate in the growing national debate about corporate governance and business ethics," she said.
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