New York Stock Exchange

board member is in hot water.

Wall Street regulator NASD said it charged a small investment bank,


, with unlawful profit-sharing activities involving hot IPOs between late 1999 and early 2000. The bank is led by Kenneth Langone, a NYSE board member.

In the complaint, the NASD said Langone's Invemed Associates LLC received millions of dollars in inflated commissions after allocating shares of hot IPOs to preferred customers.

"These inflated commissions accounted for approximately one-third of the firm's total agency commission revenue during the last quarter of 1999 and the first quarter of 2000," the complaint alleges. "Invemed's sales representatives received approximately 50% of commissions generated on trades done in the accounts of their customers."

Customers paid commissions as high as $2 a share on large transactions where the typical or ordinary charge would have been about 6 cents, according to the NASD. In addition, customers paid the firm commissions as high as $8 a share as they "flipped" their allocated IPO shares, or immediately sold them in the aftermarket for a large profit.

Although Langone isn't mentioned by name in the complaint, there are several references to Invemed's "CEO," which is one of Langone's titles at Invemed.

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The complaint says Invemed participated in a syndicate, or selling group, in more than 50 IPOs between October 1999 and March 2000. Close to 90% of those were lead-managed or co-managed by CSFB, according to



"Most of these IPOs opened for trading at significant increases from their offering price, with 20 of them more than doubling in value from the IPO price," the NASD said

The news comes less than a month after Citigroup CEO Sandy Weill said he won't seek a position on the NYSE's board of directors after New York state attorney general Eliot Spitzer voiced strong opposition. Citigroup was forced to pay $400 million to settle conflicts of interest charges brought about by Spitzer.

Another executive, Todd Christie of Spear, Leeds & Kellogg, a unit of Goldman, also had been nominated to join the board, but Christie was fired after a steep revenue decline at the unit, making the nomination moot. Last year, Martha Stewart resigned from the exchange's board amid insider-trading charges.

Richard Grasso, the chairman of the NYSE, has come under increased pressure for supporting both Weill and Stewart, and is said to be out of touch with current market conditions. Grasso is a member of the board of directors of home-improvement chain

Home Depot

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, which Langone co-founded in 1978.