I don't understand the conspiracy theory. The investment bank will only agree if kickback > shortfall, and a big investor will only agree if kickback < shortfall. Obviously I'm missing something. Why can't the investment bank sell directly on the market in the first place?
It's the company going public that is offering the shares so the IB doesn't suffer as much if the price is lower. The shortfall is the company's while the kickback goes to the IB.
As I see it it's not so much a 'conspiracy' as a set of misaligned incentives, which cause some parties to 'naturally collude' against the offering company, even if they (colluders) don't explicitly agree on this.
I think it is to try to avoid the appearance of impropriety even while still having the appearance of impropriety for anybody who (like us, presumeably) is not totally incapable of keeping track of which peanut the shell is under in the shell game they're playing.
You can describe much of Wall Street and Washington, DC as a shell game. So my pet theory goes. :)
