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Time to level the playing field

CSFB is also the chief suspect in a probe into IPO allocation processes by the Securities and Exchange Commission, one which could shake up the entire industry.

The SEC began its inquiry after receiving an anonymous letter from a buy-side firm, alleging that CSFB was tying allocations to higher commissions. Usually, investors pay five cents a share; allegedly CSFB, and others, have been charging up to $1 a share for select IPOs. The SEC is investigating CSFB but has asked other firms for all information on IPO allocations of 10,000 shares and above. Those firms include Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley Dean Witter and Salomon Smith Barney.

For investors these payments were the price of ensuring a sizeable allocation of an IPO. The frenzied popularity of tech stocks led the way. They were usually small-sized deals of under $1 billion, if not under $500 million, and a large number of deals doubled on the first day. In the past, bankers would try to price in a 10% to 15% first-day increase to keep investors happy - and to boost trading profits, which in itself might be worth investigating.

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