Class 17 Public Offerings Flashcards
What is an underwriter?
Section 2(a)(11)
Underwriter means any person who has purchased from an issuer with a view to or offers or sells for an issuer in connection with the distribution of any security
What do underwriters do?
- advise issuer on how to structure a deal
- help sell the securities offered
- help prepare disclosures
- possibly directly provide financing (firm commitments)
-Big picture: gatekeepers for public markets
Why do underwriters need a reputation to function?
who would buy if the underwriter were shady? the underwriter needs to sell for issuer (not too low) and needs to offer good deals to investor (not too high).
Why is there a conflict for underwriters?
underwriters want to make investors and issuers happy
What are the types of selling commitments?
firm commitment and best efforts
Why is there underpricing?
Theories: information asymmetry, information revelation, price stabilization, agency conflicts, issuer signaling, litigation insurance, taxes
Regarding post IPO performers, why is it believed that long-run firms underperform?
What is this? ?? when companies go from potential to real??
What are the 4 issuer types?
non reporting issuer
unseasoned issuer
seasoned issuer
well-known seasoned issuers
Gun Jumping Rule
Disclosure forms
What are the stages of the registration process?
why is it unlawful to offer to sell unless a registration statement has been filed under 5(c)?
you don’t want to mislead investors
What are the exceptions of Reg FD?
Does the issuers communication condition the market?
