Primary Market
In a best efforts underwriting, what happens to securities that remain unsold?
Best efforts = no guarantee. Issuer keeps unsold shares.
Complete Analysis & Legal Rationale
In a best efforts underwriting, the underwriter agrees only to make its best effort to sell the securities. Any unsold securities are returned to the issuer, who keeps (retains) them. The underwriter takes no risk of ownership.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
In best efforts, the underwriter does not purchase unsold securities at any price.
Matches the verified teaching point in the explanation.
Unsold securities go back to the issuer, not distributed among syndicate members.
There is no auction mechanism; unsold shares remain with the issuer.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.