History Of Dot-Com Era Can Now Be Written

In a quiet, ignoble manner, the final chapter of the dot-com bubble came to a close this week. What, you didn’t hear the book closing? Join the club. I almost missed it myself.

On Tuesday, the central legal case that sought to assign blame for that era’s excess fizzled to an end. A handful of large banks put their second-most recent scandal behind them when they agreed to settle claims of rigging the IPO market for $586 million. They’re still trying to put last year’s little financial hiccup behind them.

That nine-figure sum only sounds like a lot of money because you probably work for a living. (That is, if you’re among the fortune 90 percent in Silicon Valley.) In fact, the legal firm that brought the class action suit against 309 start-ups and 55 underwriters at one point were asking for $12.5 billion.

The settlement provides a muddled, un-satisfying conclusion to an era. We wanted clarity. We wanted answers. We wanted someone to blame. Instead, we have fog. And the people we wanted to tar as the bad guys, turns out they were just scapegoats. Maybe. Or maybe not. Either way, take hear that the unfairly accused seem to have bounced back.

Just look at Meg Whitman. At one point, the former eBay CEO was held up for public scorn when a Congressional committee tagged her for pocketing $1.7 million from a practice known as “spinning” IPOs. Now she’s running for governor. (Though that’s going about as well as her acquisition of Skype).

And remember Frank Quattrone? At one point, we thought the Credit Suisse First Boston banker was our signature scoundrel who would help define that era. But after two attempts to prosecute him for allegedly interfering in a federal investigation of his firm, he agreed to a “deferred prosecution agreement” that kept him out of jail. He’s since started a new firm called Qatalyst Partners that’s supposedly advising Brocade on its plans to sell itself.

And then there was JDS Uniphase, the fiber-optics firm that spent billions of dollars buying rivals only to see their empire collapse in 2001, resulting in more than 20,000 layoffs and then-record write downs of the acquisitions. The company faced a massive class action lawsuit from the state of Connecticut that it fought in court and won. Despite not turning a profit in years, the company continues to limp along.

In the end, the only people who spent time in the pokey were the group of lawyers who filed the IPO lawsuit.  Turns out, several of the partners of the firm Milberg Weiss were guilty of taking kickbacks in unrelated cases. Go ahead. Laugh. Appreciate the irony.

We can’t say that no blame was assigned. Back in 2003, 10 investment banks agreed to a $1.4 billion settlement with the U.S. Securities and Exchange Commission.

And, of course, Silicon Valley continues to suffer for its sins. That era’s excess created a windfall that led to a glut of venture capital funds that can’t be sustained and now face a slow, painful consolidation.

But otherwise, lessons elude us. It was an era, in the end, that lacked clearly defined villains.

It was just one of those things. Human nature and all. What are you going to do?

Write the epilogue. And move on to the next book.


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