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 Strategies & Market Trends : 50% Gains Investing

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To: Elroy who wrote (108131)5/19/2012 4:18:32 PM
From: BiomavenRead Replies (1) of 114440
 
Why doesn't Schwab offer to do IPOs for 0.1% of the amount? They aren't that difficult to do.

They only look easy. Hambrecht tried to introduce an "open IPO" process - it failed miserably:

wrhambrecht.com 

Underwriters are also on the hook for any material misstatements in the prospectus - so they and their attorneys actually do significant due diligence on the company.

Setting the price on most IPOs is very tricky - get it too low and the company is mad at you; set it too high and the offering flops. You have to balance retail demand and institutional demand - and if there is mainly retail, then the price typically doesn't pop much.

Peter
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