It emerged on Wednesday that investment bank J.P. Morgan Chase has agreed to pay a $25 million fine to settle an Securities and Exchange Commission (SEC) investigation into a stock allocation process known as 'laddering'.
During the TMT bubble years, investment banks often put in place arrangements which obliged the recipients of shares in 'hot' initial public offerings (IPOs) to purchase more shares in the same firm at a later date, in order to ensure that the share prices continued to rise.
Speaking following the settlement announcement, SEC enforcement director, Stephen Cutler explained that:
"This case is yet another example of the commission's resolve to vigorously enforce those rules designed to ensure that the IPO allocation process and IPO market are fair to all investors."
J.P. Morgan spokesman, Joe Evangelisti responded by announcing that:
"We are pleased that we and the SSEC have settled these charges, and put this matter behind us."
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