UNDERWRITING CORPORATE SECURITIES

  1. 3. CHAPTER 3
  2. 4. CHAPTER 4
  1. 4.1 THE SECURITIES ACT OF 1933
  2. 4.2 PROSPECTUS TO BE PROVIDED TO AFTERMARKET PURCHASERS
  3. 4.3 FREERIDING AND WITHHOLDING/FINRA RULE 5130
  4. 4.4 UNDERWRITING CORPORATE SECURITIES
  5. 4.5 TYPES OF OFFERINGS
  6. 4.6 THE UNDERWRITING SYNDICATE
  7. 4.7 EXEMPT SECURITIES
  8. 4.8 RULE 137 NONPARTICIPANTS
  9. 4.9 RULE 138 NONEQUIVALENT SECURITIES
  10. 4.10 RULE 139 ISSUING RESEARCH REPORTS

Underwriting Corporate Securities

Once a business has decided that it needs to raise capital to meet its organizational objectives, they must determine how to raise the needed capital. Most corporations at this point will hire an investment banker, also known as an underwriter, to advise them. The underwriter works for the issuer and it is their job to advise the client about what type of securities to offer. The issuer and the underwriter together determine whether stocks or bonds should be issued and what the terms will be. The underwriter is responsible for trying to obtain the financing at the best possible terms for the issuer. The underwriter will:

  • Market the issue to investors
  • Assist in the determination of the terms of the offering
  • Purchase the securities directly from the issuer to resell to investors

The issuer is responsible for:

  • Filing a registration statement with the SEC
  • Registering the securities in the states in which it will be sold, also known as blueskying the issue
  • Negotiating the underwriter’s compensation and obligations to the issuer
TYPES OF OFFERINGS

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