Spinning (IPO)

Spinning (IPO) is the act or practice of an investment bank offering under-priced shares of a company's initial public offerings to the senior executives of a third party company in exchange for future business with the investment bank. This conflict of interest was a relatively common way for investment banks to attract new clients in the past, but has since been prohibited. Those opposed to the practice liken IPO spinning to a disguised form of corporate bribery and believe that it cheats two classes of investors: