Tags: Surging | IPOs | Prompt | Closer | Look | SEC

Surging IPOs Prompt Closer Look by SEC

Wednesday, 29 Jun 2011 07:57 AM


Some recent red-hot initial public offerings have the Securities and Exchange Commission concerned that Wall Street's underwriters may be tempted to revive some troubling tech bubble practices.

"You can't help but be concerned by IPO valuations," Robert Khuzami, the SEC's enforcement chief, told an audience of Wall Street lawyers and compliance offices in New York Tuesday.

A combination of first-day trading spikes -- such as a 109 percent advance by social media network LinkedIn Corp last month -- and razor-thin yields on bonds and other securities, may create an environment where Wall Street investment banks can take advantage of investor demand.

"It hasn't been that long ago that allocation practices were at the forefront of everyone's mind, and charges were brought against firms for Reg M and aftermarket violations for using their allocation process for creating demand in the aftermarket," Khuzami said at a luncheon hosted by the Securities Industry and Financial Markets Association.

Khuzami said the SEC will look to see "whether or not" these issues "give rise to practices that we saw historically and that troubled us."

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