The National Association of Securities Dealers is proposing new rules to curb abuses in the handling of initial public offerings of stock, also called IPOs.
Officials hope that the measures, which still must be approved by the Securities and Exchange Commission, will help restore shattered investor confidence. IPOs have come under scrutiny for what critics contend are industry-wide abuses.
Specifically, the new IPO proposals would ban:
- Quid pro quo agreements -- in which IPO shares are allocated a certain way in return for higher commissions for the underwriter.
- Laddering -- or aftermarket tie-in agreements, in which an underwriter promotes orders for an IPO at a higher price before trading starts, in an effort to boost the stock. In some cases, these agreements were a prerequisite for getting access to IPO shares at their lower offering price.
- Spinning -- a practice in which a brokerage firm gives IPO shares to an executive of a company in return for the company's investment banking business. Banks would also be prohibited from allocating shares to an executive who already has directed investment banking services toward the firm.
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United goes paperless: United Airlines said Monday that starting Thursday, it will charge passengers a $20 fee to use paper tickets for trips that could be booked electronically, and it plans to have all-electronic ticketing by January 2004.
U.S. airlines have been shifting to electronic tickets from paper tickets, which are more costly to administer. Airlines also are working to coordinate computer reservations systems so more complicated multiple airline trips often used by business travelers can be completed using electronic tickets.
The announcement from United, a unit of No. 2 U.S. carrier UAL, comes about a month after American Airlines, the world's largest carrier, said it plans to stop issuing paper tickets for domestic trips by March.
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Wireless still growing: Verizon Wireless, the nation's largest wireless telephone company, said Monday it added significantly more new customers than expected in the second quarter, a sign that the wireless industry was stronger than analysts believed.
The news fueled a rally in the battered wireless sector as shares of No. 5 wireless firm Nextel Communications and No. 4 Sprint PCS Group also jumped.
The firm said total customers rose by 723,000 in the quarter, helped by lower customer turnover. This was about a four-fold increase from the 186,000 gained in the first quarter and was more than double analysts' expectations of about 300,000. Verizon Wireless (VZ) ended the period with 30.3 million total customers.
Net customer additions, calculated by subtracting customer turnover from gross new subscribers, are a key measure of health in the wireless industry.
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Salon gets investments: Salon Media Group ( SALNC) said it has secured new bridge loan financing totaling approximately $715,000 from a group of 11 investors. The company also announced that it is in advanced discussions for a new line of credit with a commercial bank.
Salon's three subscription services -- Salon Premium, The Well and Table Talk -- have amassed over 44,000 active paid subscribers. "Paid content services are becoming increasingly popular on the Web," said Salon's CEO and President Michael O'Donnell.
In the last 90 days, Salon has signed 24 advertisers to run campaigns on Salon.com including Visa, Microsoft, American Express, Rolex, American Airlines, HBO, Absolut, PBS, Jose Cuervo, Marriott Hotels, Paramount Home Entertainment, Las Vegas Convention Visitors Association, Powell's Books, Trip.com, Progressive Auto Insurance, New York Times, Universal Studios, Democratic National Committee, LoJack and Wizards of the Coast.
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IP down-under: Australia's consumer watchdog hailed a Federal Court decision giving Sony PlayStation owners the right to modify their consoles to play imported and copied games.
The Australian subsidiary of Sony was suing Sydney man Eddy Johnson for selling and installing modifications to its PlayStation machines, claiming his actions breached copyright laws.
Late Friday, the Federal Court in Melbourne ruled Sony's region coding system, which it said was to protect its intellectual property, went beyond the provisions of Australia's Copyright Act, and that Johnson's "chipping" device was legal.
The Australian Federal Court was out of step with other international courts, such as the United Kingdom's High Court, which had recently found in favor of Sony in a similar case, the company said.
AP and Reuters contributed to this report.
