Spinning refers to the practice whereby an underwriter sells shares in a hot new issue to a CEO, for instance,-for the CEO's personal benefit-for the purpose of the underwriter gaining future business from the CEO's firm.

Question

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Spinning is the practice of an underwriter selling shares in a hot new issue to a CEO (or other influential person), not for the benefit of the firm or its shareholders, but for the personal benefit of the CEO. The expectation is that this will incentivize the CEO to give future business to the underwriter.

Spinning Refers to the Practice Whereby an Underwriter Sells Shares