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 ?
It is entirely possible that tie-ins relating to a particular programme may enjoy a second lease of life if DVD releases or repeat screenings of the show in question stimulate a sufficiently enthusiastic response among viewers.
has never been higher, counter-balancing the media tie-in clones.
This conclusion supported the first by making it seem that there was no need to worry about tie-ins where competition was vigorous--even if one still believed they were generally harmful to competition.
Mouse House's 10-year exclusive tie-in deal with McDonald's expires in 2006, and CEO Jim Skinner told the fast-food giant's annual shareholders' meeting, "We are looking forward to the opportunity to have flexibility around promotional activities and products.
At the same time some of the more extreme tie-ins, such as redemption charges of more than 4.
Producers pitched examples such as recent tie-ins between Sony products including mobile phones and HDTVs with "Spider-Man 2.
Installation of the subsea structures, umbilicals, tie-ins spools and system testing will be completed by the Diving Support Vessels CSO Wellservicer and CSO Orelia.
70 per cent five-year fix has no extended tie-ins, though you must take their insurance and there is an arrangement fee of pounds 395.
Stolt is presently preparing to perform riser tie-ins at the existing Brazos Block 538 platform and will tie-in the pipeline at the Galveston Block A244 location following platform installation this month.
An early decision on the release schedules is essential for exploiting merchandising tie-ins fully.
This momentum should continue as we leverage additional tie-ins and partnerships, and ready the launch of our next game, Nancy Drew: The Creature of Kapu Cave in October.
But studios more than ever before now realize that tie-ins are important for their business.