Austrian lender Bank fur Arbeit und Wirtschaft, in a surprise move, announced Friday that it is no longer financing customers in the market for PIPEs, or private investments in public equity. Austria's fourth-largest bank announced its decision to withdraw from the $18 billion-a-year U.S. PIPEs market in a press release posted on its Web site. The bank's tersely worded statement said its managing board "decided in February 2006 to discontinue the financing of customer activities in the PIPE issuance market.'' In the U.S., Bawag, as the bank is commonly called, is best-known for its ties to Refco ( RFXCQ), the bankrupt and scandal-tarred commodities and derivatives brokerage. Bawag was a one-time minority owner of Refco and made a $410 million loan to the CEO, Phillip Bennett, just hours before the brokerage disclosed that Bennett had been hiding hundreds of millions of dollars in customer trading losses for years. Bawag offered no reason for the decision to stop providing financing for PIPEs, which are often last-ditch financing mechanisms used by small-cap companies, many of which trade for around a dollar share. The PIPE market has been under intense scrutiny the past two years, as U.S. regulators look into allegations of stock manipulation by the hedge funds that invest in PIPE deals. A Bawag spokesman was unavailable to comment. In January, TheStreet.com reported that Bawag had quietly become a key player in the PIPEs market by becoming either a significant investor or controlling shareholder in at least four foreign hedge funds that invest in such deals. The four hedge funds with close financial ties to Bawag are Alpha Capital, Austinvest Anstalt Balzers, Austost Anstalt Schaan and Celeste Trust, all of which are based in the tiny European country of Lichtenstein. TheStreet.com also reported that Bawag has a financial interest in LH Financial Services Corp., an obscure New York investment firm that has sunk more than $70 million over the past two years into about 150 different PIPEs deals, almost all of them penny-stock companies.