Series 79: Chapter 6

Chapter 6

Activities of the Underwriting Syndicate

In a typical public offering, one or more investment banking firms act as underwriters—intermediaries between the issuer of the security and the ultimate investors. The underwriting syndicate is the group of investment banking firms responsible for placing the securities of a public offering with investors. Each syndicate member agrees to take a fixed percentage of the offering. This arrangement spreads the underwriting risk, as well as the potential for profit, among multiple firms.

Generally, an issuer will select a lead manager early in the offering process. There is often stiff competition for the lead underwriting gig, especially where the issuer is prestigious or the offering is likely to be in high demand. In these circumstances, various investment