Wall Street brokerage JP Morgan Chase has agreed to pay $25m to settle allegations by the main US financial watchdog that it acted improperly in handling share flotations.
The US Securities and Exchange Commission (SEC) alleged JP Morgan induced customers who got shares in initial public offerings (IPO) to "place purchase orders for additional shares in the aftermarket".
The complaints relate to IPOs in 1999 and 2000 when the tech share boom was at its peak.
JP Morgan agreed to the settlement without admitting or denying wrongdoing, the SEC said.
The SEC added that the terms of the
settlement are subject to court approval.
The SEC has been investigating how shares in IPOs were allocated during the dot.com boom since 2000.
In January 2002, Credit Suisse First Boston agreed to pay $100m after a lengthy inquiry into how it allocated shares to investors.
The SEC alleged that JP Morgan customers placed aftermarket orders and also bought shares in the new issues during the first few trading days.
"This case is yet another example of the Commission's resolve to vigorously enforce those rules designed to ensure that the IPO allocation process and IPO market are fair to all investors," said Stephen Cutler, the director of the SEC's Division of Enforcement.
"This case stands as a warning to all underwriters - they cannot engage in conduct that could distort the market for IPO stocks," he added.
JP Morgan spokesman Joe Evangelisti said: "We are pleased that we and the SEC have settled these charges, and put this matter behind us."