underwriting outline

underwriting syndicate

• different investment banks compete to be underwriter
• competitive or negotiated method
• syndicate, underwriting group
• selling syndicate, underwriting group
• lead underwriter, manages underwriter
• syndicate manager, lead underwriter-manages books, deals with issuer and syndicate

tombstone ad,

• advertise securities
• can only provide basic information
• list of underwriting firms names
• lists lead underwriter next to other broker/dealer firms

selling syndicate

• one or more broker/dealers who will commit large sums to bringing issue to market
• help with pricing of issue
• decide how to price issue
• syndicate buys shares/bonds from issuer
• lead underwriter, responsible for selling big part of issue
• other syndicate members responsible for selling small part of issue

syndicate letter a.k.a agreement among underwriters a.k.a. account letter a.k.a syndicate agreement

• terms of account management
• amount of issue per member
• amount of money paid per member
• basis-how issue will be sold if oversold?
• syndicate member obligations
• participation-east or western account?
• corporate-sold night before or morning of sale, last opportunity for syndicate members to give up their commitment
• municipal-signed 2 weeks before bond issue
• after issue sold, members receive sales charges
• syndicate settlement letter, issue has been sold, how much syndicate members receive for selling their parts of the issue

Selling group

• no financial commitment to sell # of shares
• can sell parts of issue
• gets the most small profit of all vs manager, underwriter

Which of the following is part of an underwriting syndicate that has a financial responsibility to the underwriting but has no other commitments other than pricing and selling?

• syndicate member
• financial commit and sells
• manager, underwriter-other work
• selling group sells, no financial commitment