Reply #19: Piper Fined for IPO Spinning [View All]

[UpInArms]

http://www.thestreet.com/stocks/brokerages/10170386.html

Piper Jaffray (PJC:NYSE - news - research) is the latest investment bank to pay up for its bubble-era excesses.

The NASD fined Piper Jaffray $2.4 million for "spinning," an illicit practice in which the firm allegedly dolled out shares in hot initial public offerings to 22 corporate executives the firm was seeking business from. The fine represents the profits the executives made from flipping, or quickly trading the shares.

Regulators have been cracking down on investment banks for spinning for the past several years. Two summers ago, Citigroup's (C:NYSE - news - research) past strategy of doling out shares in hot IPOs to telecom executives drew fire from both regulators and congressional investigators looking into the collapse of WorldCom.

"Spinning contributes to the public's perception that the IPO market is rigged in favor of company insiders who receive highly profitable IPO shares as a payoff for lucrative investment banking business," says NASD Vice Chairman Mary Schapiro.

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