Financial intermediaries are known to have access to privileged information on firm value, potentially providing valuable services by revealing it to uninformed investors. An important issue that arises is whether investment banks have an incentive to distort prices by communicating biased information on the firms they are underwriting in IPOs. Reputation acquisition may mitigate this problem since intermediaries can lose credibility by incorrectly evaluating the profitability of firms. We argue that the introduction of reputation may not suffice to eliminate misreporting altogether, allowing less talented intermediaries to profit from not revealing their private information to the market.