In a settlement of one of the last remaining bubble-era regulatory investigations, Goldman Sachs ( GS) and Morgan Stanley ( MWD) will each pay $40 million to resolve charges that they "artificially'' stimulated demand for tech IPOs. The Securities and Exchange Commission, in separate civil complaints, charged the two Wall Street securities firms with pressuring institutional clients seeking shares in hot initial public offerings to support the issue once it starts trading in the so-called aftermarket. "These cases underscore the commission's resolve to ensure the integrity of IPO markets by prohibiting conduct that could artificially stimulate demand or higher prices in the aftermarket -- whether or not there is manipulative effect,'' says Stephen Cutler, the SEC's director of enforcement. The SEC announced the settlement with the two Wall Street securities firms nearly two years after it opened the investigation into abuses in the practice known as "laddering.'' In the aftermath of the bursting of the Nasdaq bubble, laddering got a bad rap because critics viewed it as a way for Wall Street to create additional demand for IPOs in the aftermarket and drive the price for overvalued tech stocks even higher. "The conduct here created a risk of misinformation about the demand for an IPO,'' said Mark Schonfeld, the director of the SEC's Northeast regional office. The firms, as is customary in regulatory settlements with the SEC, neither admitted nor denied the allegations. But in the settlement the firms agreed to an injunction that prevents them from engaging in laddering again. In October 2003, J.P. Morgan Chase ( JPM) agreed to pay a $25 million fine to settle a similar laddering investigation initiated by the SEC.