Howard Davies, executive chairman of the FSA, explains why the FSA is writing to firms: "Recent disclosures in the US have thrown a spotlight on market practices surrounding IPOs. We want to be sure that firms operating in our markets meet the high standards implied by our regulatory principles."
The FSA considers that 'spinning' could breach a variety of the principles that UK regulated financial firms are required to respect. These principles include the requirement to act with integrity, due skill, care and diligence; the need for proper standards of market conduct; the need to treat customers fairly and the need to manage conflicts of interest.
The full text of the letter can be accessed by clicking here.