Pricing – What actions may underwriters take after pricing? (67)

pricing and that the statements in the prospectus remain accurate. At the closing, the company will deliver the documents required by the underwriting agreement, including a bring-down comfort letter, certificates of officers and one or more opinions of counsel. Upon satisfaction of the closing conditions, the underwriters will wire transfer the net proceeds of the offerings to the company and upon receipt, the company will instruct its transfer agent to release the shares to the underwriters. A final prospectus must accompany or precede the delivery of the securities after their sale.
What actions may underwriters take after pricing?
After pricing and during the offering itself, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, purchases to cover positions created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the IPO. Covered short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares of common stock from the company in the IPO. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters consider, among other things, the price of shares available for purchase in the open market compared to the price at which they may purchase shares through the over-allotmentoption.
Naked short sales are any sales in excess of the over- allotment option. The underwriters must close out any naked short position by purchasing shares in the open

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