Underwriting Syndicate Activities: Rapid Fire
Chapters in this video
- 0:00 Syndicate players: AAU versus Selected Dealers' Agreement
- 1:08 Several liability and the selling-group trap
- 2:28 Firm commitment versus best efforts: who eats the risk
- 3:34 Contingency triggers: AON, mini-max, and escrow rules
- 4:40 Lock-ups as private contracts, not SEC mandates
- 5:38 Regulation M restricted periods and the actively-traded exception
- 6:43 FINRA selling-agreement disclosure: POP and concession terms
- 7:11 Rapid-fire exam recap
What this video covers
- Why the Agreement Among Underwriters (AAU) creates several, not joint, liability among syndicate members, and what happens when one underwriter fails to sell its allotment
- How the Selected Dealers' Agreement differs from the AAU: selling-group members bear no inventory risk and earn only the concession, with unsold shares reverting to the lead manager
- Why firm commitment makes the underwriter a principal who bears unsold-share risk, while best efforts makes the underwriter an agent and leaves risk with the issuer
- Why standby underwriting in a rights offering is a firm commitment, not best efforts, despite its backstop appearance
- How all-or-none (AON) and mini-max contingency labels trigger the prohibited-representations rule and the investor-payment rule, and what promptly means for escrow deposits
- Why lock-up terms are private contracts, not SEC mandates, and which party typically holds the right to grant an early waiver
- How the Regulation M restricted period differs by tier, who qualifies for the actively-traded exception, and why issuers and selling shareholders never get that carveout
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