DLJ Lockup Policy Aims to Ease Dumping 180 Days After IPOs

Investment bank Donaldson Lufkin & Jenrette (DLJ Quote) is attempting an initial public offering lockup policy that lets venture capital backers sell parts of their stakes sooner than current structure permits, but only if the stock price has appreciated.

Lockup expirations have roiled newly issued stocks as investors often try to dump shares before the standard 180-day bar is lifted on selling by insiders and venture capitalists. Red Hat (RHAT Quote), for example, saw its stock drop 35% in the month before its lockup expired as investors anticipated heavy insider selling, in an instance demonstrating how managing such periods has become crucial.

DLJ, in an attempt to smooth this kind of volatility, is using the $58 million IPO of Embarcadero Technologies to try a plan that allows holders who aren't "officers, directors or affiliates of Embarcadero" to sell shares sooner than 180 days. ...