South Florida Arbitration & Litigation Lawyer Blog
Investment Banker – Florida Securities and Investment Abuse, Breach of Contract and Breach of Fiduciary Duty FINRA Arbitration and Business or Commercial Dispute State and Federal Litigation Attorney
An Investment Banker is a firm, acting as an underwriter or agent, that serves as an intermediary between an issuer of securities and the investing public. Investment Bankers are licensed with both the Securities and Exchange Commission and FINRA.
In what is termed Firm Commitment underwriting, the investment banker, either as manager or participating member of an investment banking syndicate, makes outright purchases of new securities from the issuer and distributes them to dealers and investors, profiting on the spread between the purchase price and the selling (public offering) price.
Under a Best Effort offering, the investment banker markets a new issue without underwriting it, acting as an agent rather than a principal and taking a commission for whatever amount of securities the banker succeeds in marketing. Historically, Best Effort offerings usually carry higher levels or risk.
A third type of arrangement between and Investment Banker and issuer is called a Standby Commitment. In such a situation, the investment banker serves clients issuing new securities by agreeing to purchase for resale any securities not taken by existing holders of rights.
Additionally, the majority of investment bankers also maintain broker-dealer operations, serving both wholesale and retail clients.
Please keep in mind that this post is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If you have any questions concerning the contents of this post, you should contact a qualified professional.
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