Updated from 8:01 a.m. EDT

The first U.S. IPO in two months came kicking and screaming to market Monday when transaction processor iPayment ( IPMT) priced 5 million shares at $16 each in an offering led by Bear Stearns.

The shares opened at $20.20 on the Nasdaq.

The pricing caps a harrowing four days for both iPayment, Bear Stearns and the entire initial-offering market. All three were hurt when the deal was nearly scuttled Friday after it came to light that a Bear Stearns analyst appeared in a promotional film praising the company and stock.

That's a no-no under the recently enacted global settlement covering conflicts of interest at the research units of major investment banks secured by New York Attorney General Eliot Spitzer.

A spokeswoman for the attorney general's office was quoted in media reports that Bear Stearns had expressed regret over the analyst's appearance and promised to enforce the settlement's terms more carefully.

Bear was contrite in a statement released earlier. "We fully support both the letter and more importantly the spirit of the recent settlement agreement," it said. "We deeply regret that this unfortunate incident occurred. Once the problem was identified, we took immediate action to rectify the situation and are taking precautions to ensure that it will not occur again."

Withdrawal of the iPayment deal would have been a body blow to hopes that the environment for new equity issues is improving, especially given the circumstances. Published reports said the Bear Stearns analyst, James Kissane, appeared in a prerecorded Internet roadshow, saying, "I think iPayment represents a great way for investors to play a proven winning strategy in the merchant processing space focused on small businesses, which I just think is a tremendous growth opportunity."

The language flies in the face of the spirit of the global settlement, which had as its central aim the separation from analysts, who are supposed to act as disinterested agents for clients, and investment bankers, whose job is to sell corporate finance deals to institutions.

"It's just astonishing to me that a firm could allow an analyst to participate in a roadshow -- and the fact that the prohibition on such conduct isn't literally in effect yet doesn't make me any less disappointed," SEC enforcement chief Stephen Cutler was quoted as saying in the Journal.

Earlier this week, another technology IPO, DigitalNet, was withdrawn because of market uncertainty. DigitalNet is a government IT contractor, and several reports said the deal was pulled after institutions became skittish about customer retention issues and its lack of profitability.

No initial offering of stock had been sold to the U.S. public in two months. About 20 deals are said to be registered and waiting for the go-ahead from underwriters.

iPayment raised $80 million in its offering.

Unlike DigitalNet, whose most recent pro forma financial statement showed a decline in revenue, iPayment's April 23 report showed the company had net income of $900,000 on revenue of $46.7 million, compared with a loss of $700,000 on revenue of $16.5 million last year. Most of the revenue increase was a result of recent acquisitions, however.

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