|Thursday, July 25, 2002
Nancy A. Condon 202-728-8379
Michael Shokouhi 202-728-8304
NASD Board Approves Proposed Conduct Rules for IPO Activities
Washington, D.C. — NASD's Board of Governors approved new rules governing initial allocations of securities (IPOs) that would ban, among other things, the practices of "spinning," "laddering" and quid pro quo agreements. These new rules are a result of a review by NASD of current industry practices, and will be published for public comment and will require the approval of the Securities and Exchange Commission (SEC).
"These proposed rules will clearly identify unacceptable conduct associated with IPO allocation and distribution," said Robert R. Glauber, Chairman and CEO of NASD. "IPO shares cannot be allocated in a manner that puts an investment bank’s interests above those of its customers. It is critical that investors have confidence in the integrity of the IPO process."
The proposed rules will prohibit the following:
In order to enable NASD to monitor compliance with this provision, book running managers would have to file with NASD information regarding the allocation of IPO shares to corporate executive officers and directors of a company that is being taken public.
The proposed rules will be made available for public comment in a Notice to Members prior to being submitted to the SEC for approval.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business – from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information please visit www.nasd.com.