|
An adviser may defraud its clients when it disproportionately allocates hot initial public offerings ("IPOs") to favored accounts, and does not adequately disclose this practice to all clients.10 For example, allocations of IPOs may be inequitable when the following types of accounts are favored: proprietary accounts; accounts that pay performance-based fees; accounts that have relatively poor performance; and new investment companies (in order to boost performance to attract additional assets).
|