Lehman Brothers Holdings Inc. confirmed that regulators have requested information and documents on the Wall Street firm’s sale of initial public offering shares as part of an ongoing investigation.
The New York Stock Exchange acting in coordination with the Securities and Exchange Commission and the National Association Of Securities Dealers, is seeking testimony relating to the “spinning” of IPO shares, the firm said in a financial report late Tuesday. The company said it is working to respond to the requests.
Spinning occurs when a firm underwriting an IPO allocates hot shares of a new public company to preferred customers such as the directors and officers of existing or potential investment banking clients in exchange for future investment banking business.
The firm disclosed the regulators’ request in its detailed second-quarter report, or 10-Q, filed with the SEC.
Lehman was among 10 Wall Street securities firms that signed on to a $1.4 billion deal with regulators earlier this year to settle charges that they issued puffed-up stock research to win investment banking business.
The SEC, NASD and NYSE, along with the offices of several state attorneys general, continue to pursue investigations of research and IPO practices at major Wall Street brokerages.
Several firms, including Morgan Stanley and Bear Stearns, have recently confirmed that they have been subpoenaed in an expanded stock-research probe focused on the supervisory level.