Spear Leeds, now called Goldman Sachs Execution & Clearing, hid IPO sales from the DTC between August 1997 and January 2001 after being pressured by clients who wanted to remain anonymous.

The regulator says the firm designed a plan to enable its clients to by-pass the DST's IPO tracking system which was introduced in 1997. The DTC system tracks IPO sales and requires specialists to report which customer's are selling IPO shares. The purpose of the system was to allow underwriters to monitor the flipping of new issues.

In order to avoid detection by the DTC, Spear Leads completed delivery on the sales of IPO shares for its customers by borrowing shares from third parties rather than moving shares from the IPO Control Account. That way it appeared that the customers still owned their shares and the sales were not detected and included in an IPO Tracking Report. Once the time period for tracking sales of IPO shares was over, Spear Leeds replaced borrowed shares by delivering shares from the IPO Control Account back to the third-party lenders.

Mary Schapiro, vice chairman, NASD, says: "For a firm to design a system to deprive underwriters and other market participants of critical information relating to IPO allocations - information that they are entitled to - is deeply troubling, and a serious violation of the high ethical standards required of firms."

NASD says its disciplinary action rests on Spear Leeds' actions to conceal IPO information from market participants.

Spear Leeds neither admitted nor denied the charges, but agreed to the entry of NASD's findings.

The Goldman Sachs Group acquired Spear Leeds in late 2000. The unit was renamed Goldman Sachs Execution and Clearing in January 2005.

Spear Leeds was also one of 18 firms fined by the NASD in October last year for violating order auditing regulations.