House Hearing May Cover IPO Allocations

A planned U.S. hearing next month on potential conflicts of interest facing Wall Street stock analysts may be expanded to include initial public offering allocations, a congressional spokesman said Tuesday.

Rep. Richard H. Baker (R-La.), who chairs the House Financial Services subcommittee on capital markets, is expected to decide the agenda for a possible hearing within the next two weeks, Baker spokesman Michael DiResto said.

The issue of IPO allocation “is on the table for consideration,” DiResto said, adding that a witness list has yet to be determined.

U.S. regulators are investigating whether some investment banks exploited their positions as IPO underwriters and forced big investors into paying unusually large commissions in exchange for shares of hot IPOs.

For now, Baker’s hearing, which could be held in mid-June, would focus on shedding light on the potential conflicts that may arise when a brokerage’s analysts issue a research report on a company that may simultaneously be doing business with the firm’s investment banking division.