Thomas Weisel Partners Settles Charges Over IPO Allocations

From Dow Jones/Associated Press

Thomas Weisel Partners, a San Francisco investment bank, agreed to a $1.75-million settlement Wednesday with the NASD over its allocation of shares in initial public offerings.

The payment, which consists of a $450,000 fine and repayment of $1.3 million in ill-gotten profits, settled allegations that Weisel received kickbacks in the form of unusually high trading commissions from its customers in exchange for the opportunity to acquire shares in hot IPOs.

The settlement also resolves a finding by the NASD, formerly the National Assn. of Securities Dealers, that from 1999 to 2001, Thomas Weisel Partners violated record-keeping rules by failing to keep e-mails for a minimum of three years.


The IPO allocation charges against Thomas Weisel Partners found that the company, which made a name for itself in the late 1990s as a technology stock underwriter, received trading commissions that were sometimes more than $1 a share from customers within a day of allocating hot IPOs to them.

The stocks were easily traded at a typical commission rate of about 6 cents a share.

In one case, the NASD found that three customers paid Weisel more than $1.2 million for nine transactions on March 3, 2000, with commission rates starting at $1 a share. Had the customers paid a typical trading commission, the cost would have been $122,400.

The same day, the customers received large allocations of two hot IPOs, Versata Inc. and Inc. Versata nearly quadrupled from its offering price on its first day of trading and more than doubled.

One of the customers had received 58,000 shares of Versata’s 3.9-million-share offering, according to the NASD.