The topic of IPO spinning has not received much attention in the recent past. In the midst of the recent financial crisis we have been experiencing, the IPO market has become relatively quiet. However, there is broad consensus that the IPO market could become much more active in the near future, and it seems like an opportune time to examine an issue that could emerge again. We looked at the Wall Street Journal article “A New Look at an Old Trick: IPO Spinning.” This article provides a brief description of what IPO spinning is, a look at one of Frank Quattrone's highest profile cases, and provides some evidence of the effects it has from a study by Xiaoding Liu and Jay Ritter. First, we'll look at what spinning IPOs actually entails. Very simply, IPO spinning is the sale of shares in an initial public offering at a price lower than what demand would imply. At first glance it might seem like just a pricing error, however the reasons behind the IPO are deeper. If an IPO occurs, the investment bank involved in the undervaluation of the stock will set aside a number of shares for favored executives in hopes of picking up their future business. The idea of ​​efficient markets implies that stocks will not remain undervalued for long, and in fact individuals who hold undervalued stocks will benefit greatly when the market brings them back to their fair value. Therefore, IPO rotation results in very happy executives who look very favorably on an investment bank when choosing one for their company. However, another result is a smaller amount of capital raised by the now public company. Xiaoding Liu and Jay Ritter's study sheds further light on why an investment banker may engage in spinning. Their... middle of paper... and/or prison time could be effective, as they are unclear at this time. Finally, since this essentially presents a principal-agent problem, more active involvement of boards of directors in selecting an investment bank or requesting multiple underwriting would help ensure that the well-being of the company and shareholders are at the forefront of the process decision-making. that people are aware of this issue and its consequences now, before it again becomes a prevalent practice in issuing initial public offerings. IPO spinning is a harmful practice for both companies and their shareholders, all to the benefit of investment banks and some executives. Hopefully, the IPO market will become much more active again, and when that happens, companies will receive the proceeds they are due and shareholders will be able to realize the full value of their investments..