DEFINITION of 'Laddering'

The promotion of inflated pre-IPO prices for the sake of obtaining a greater allotment of the offering. Laddering is an illegal IPO practice in which the underwriter engages in the sale of IPO shares to clients with the implicit agreement that more shares will be purchased post IPO, leading to big gains for both parties. Once the price increases a certain level, "insiders" then sell their shares and take their profits.


An underwriter will push up the issue price of an IPO through promotion, in order to please the issuer and secure a larger allotment. By agreeing to allocate additional shares to choice clients, the underwriter and clients can make big gains on the IPO shares, while the firm offering shares in the IPO are happy with the underwriter for creating increased market value.

  1. Annuity Ladder

    An investment strategy for retirees or near-retirees that entails ...
  2. Bond Ladder

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  3. Allotment

    During an IPO, this is the number of shares granted to each participating ...
  4. Underwriting

    1. The process by which investment bankers raise investment capital ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Overallotment

    An option commonly available to underwriters that allows the ...
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