tie-in agreement

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Tie-In Agreement

An agreement between an investor and an underwriter requiring the investor to buy more shares of a new issue in the secondary market as a condition of buying shares from the underwriter in an initial public offering. This maintains a higher share price for the new issue as demand is inflated artificially. Tie-in agreements are illegal.

tie-in agreement

A requirement that investors purchase additional shares in the aftermarket as a condition of being allowed to acquire shares that are part of an initial public offering. Reports of this illegal activity by investment bankers were common during the new-issue boom of the late 1990s and early 2000s.
Case Study Initial public offerings can be a lucrative business for underwriters, especially during strong bull markets when capital-hungry companies want to tap the capital markets at the same time that individual and institutional investors are clamoring to acquire shares that are part of new stock issues. The heady days of the dot-com boom during 1998 through 2000 brought an increased level of investor demand for new common stock issues. Watching as new issues soared in price on initial trading immediately after they were brought to market caused even normally conservative investors to join the IPO mania. The huge demand for new issues apparently caused some underwriters to take advantage of the leverage they enjoyed in allocating shares among investors. Following up on investor complaints, the Securities and Exchange Commission, the regulatory unit of the National Association of Securities Dealers, and the U.S. Attorney's Office in Manhattan commenced an investigation of the allocation process in initial public offerings. In addition to charging certain underwriting firms with demanding inflated commissions or taking kickbacks, firms allegedly were also promoting tie-in agreements whereby customers who got IPO shares were required to purchase in the aftermarket additional shares of the same stock. The purpose of the tie-in was to create artificial demand to drive the price of the IPO higher in the secondary market. Tie-ins had for years been illegally used by retailers to earn extra income when particular items were in short supply. Now tie-ins were being used in initial public offerings.
References in periodicals archive ?
has never been higher, counter-balancing the media tie-in clones.
I didn't want to get in tie-ins with the possibility of interest rates coming down when we go into the euro.
In fact, 2002 has to be considered one of the top movie tie-in years to date for the toy industry, with no less than a half-dozen movies expected to spur toy sales dramatically.
69 per cent has a tie-in for two years and an arrangement fee of pounds 295.
Such a wide array of tie-ins led to some public backlash and many unsold products, but it didn't hurt the performance of ``The Phantom Menace,'' which grossed $431 million domestically.
Banks also would have an unfair advantage over consumers and non- affiliated agents because of credit tie-ins, Malkin said.
The movies, with all of the tie-ins and promotional and products activities, it's incredible the scope involved in that marketing now.
With high moisture tolerance, temperature resistance, and abrasion resistance; fast touch dry and set times; and ease of application with a brush or roller, the forest green Protal 7200 is used for on site brush applied liquid coating of girth welds, tie-ins, welds for boring applications, repairs to FBE, station piping, fittings, and fabrication.
We are going to continue to add new features and services, including more tie-ins with Firehouse Magazine and the Firehouse series of trade shows and conferences, to help us grow even more.
It's also possible that other bowls might end up with at-large spots because conferences with tie-ins don't have enough teams bowl eligible.
The marketing strategy will include on-campus and stadium promotions, free minutes, and marketing tie-ins to movies.
The Florida Citrus Bowl has locked up its conference tie-ins with the SEC and Big Ten for another four years and has increased its payout to $4.