Definition of an Underwriter

What this video covers

• The three-part Securities Act of 1933 (SA) definition of an underwriter, with distribution at its center
• Why the exam defines underwriter by role, not by job title, and how a random buyer can still legally become an underwriter
• Firm commitment underwriting: the underwriter purchases the entire issue outright and bears 100% of unsold-share risk
• Best efforts underwriting: the underwriter acts as agent, unsold shares return to the issuer, and the issuer retains the risk
• All-or-none as a strict variation of best efforts: the deal cancels entirely if the full offering does not sell, and the issuer still bears the risk
• How the managing (lead) underwriter forms an underwriting syndicate to spread risk and distribution across multiple broker-dealers
• Why selling group members are not underwriters: they assist distribution but take on zero underwriting liability and zero financial risk