updated 5/18/2004 12:55:36 PM ET 2004-05-18T16:55:36

Three major investment firms were fined a total of some $15 million by securities regulators Tuesday for alleged improper distributions of hot new stocks to certain customers in return for inflated commissions.

The National Association of Securities Dealers, the brokerage industry's self-policing organization, announced the civil fines of $4.95 million against Bear Stearns, $5.29 million against Deutsche Bank and $5.39 million against Morgan Stanley. The NASD also censured the Wall Street firms.

The three firms neither admitted to nor denied the allegations in their settlements with the NASD.

The violations of brokerage industry rules allegedly occurred in late 1999 and early 2000, during the height of the tech-stock boom and the frenzy of initial public offerings of stock, known as IPOs. The NASD and the Securities and Exchange Commission have brought a number of actions in recent years against Wall Street firms for their dealings in IPOs.

The NASD said Tuesday that Bear Stearns, Deutsche Bank and Morgan Stanley violated its rules by obtaining unusually high commissions from certain customers within one day of giving the customers shares in desirable IPOs. The favored customers were in a position to reap huge profits by selling their shares after the prices had soared.

Internal e-mails at the three firms mentioned unusually large commissions from certain customers on or close to the days on which the firms distributed the IPO shares to those customers, the NASD said.

"None of these firms was providing unusual or extraordinary services to justify these very high commissions," said Mary Schapiro, NASD's vice chairman and president of regulatory policy and oversight. "By accepting high payments under those circumstances, these firms failed to observe the high standards of commercial honor and just and equitable principles of trade demanded by NASD rules."

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