3.4 Public Offerings and IPOs
Securities issuance through Initial Public Offerings (IPOs) and secondary offerings are regulated under the Securities Act of 1933 and state Blue Sky qualification standards.
Key NASAA Exam Takeaways
- Primary market transactions involve the issuer creating new shares and receiving the proceeds.
- Secondary market trades occur between investors without issuer participation.
- Firm commitment underwriting puts underwriting risk on the syndicate; best efforts puts unsold share risk on the issuer.
- SEC Rule 415 (Shelf Registration) permits issuers to preregister securities for up to 3 years.
Knowledge Checkpoint • Section 3.4
In an underwriting syndicate, which underwriting commitment arrangement places the entire financial risk of unsold securities on the investment banker?