Firm Commitment Underwriting Risk and the Over-Allotment Option: Do We Need Further Legal Regulation?
Securities Regulation Law Journal, Vol. 26, p. 245, Fall 1998
Posted: 11 Aug 1999
There are 2 versions of this paper
Firm Commitment Underwriting Risk and the Over-Allotment Option: Do We Need Further Legal Regulation?
Securities Regulation Law Journal, Vol. 26, p. 245, Fall 1998
Number of pages: 25
Posted: 18 Dec 2010
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Abstract
This article examines firm-commitment initial public offerings, exploring the ways underwriters use and abuse the over-allotment option to affect legal price stabilization in after-market trading. After illustrating that underwriters always profit when they make full use of the over-allotment option, the authors suggest that the NASD reexamine the size of the over-allotment option and require disclosures concerning the use of the option be included in the prospectus distributed to potential buyers of newly issued securities.
Suggested Citation: Suggested Citation
Cotter, James F. and Thomas, Randall S. and Thomas, Randall S., Firm Commitment Underwriting Risk and the Over-Allotment Option: Do We Need Further Legal Regulation?. Securities Regulation Law Journal, Vol. 26, p. 245, Fall 1998, Available at SSRN: https://ssrn.com/abstract=171725
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