Editorial

Author: | Published: 1 Dec 2005

Sometimes innovation turns out to have unexpected side effects. Competitive initial public offerings (IPOs) were designed to prevent repricing by encouraging banks to quote more accurate price ranges before receiving bookrunner positions. But now they are under regulatory scrutiny amid concerns that they over-inflate prices and risk compromising research.

The UK Financial Services Authority (FSA) is investigating Inmarsat's use of competitive bidding in its £355 million ($610 million) flotation in June, which was the first use of the technique in a UK deal. A statement from the FSA, dated November 11, says the regulator is concerned that issuers could exert pressure...