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Wall Street

by Mike Masnick

Wed, Aug 11th 2004 4:01pm





Who Has The Secret Handshake To Get In On The Google IPO?

from the not-for-average-investors-at-all dept

Last week we noted that almost all of the underwriters supposedly offering shares in the Google IPO had set up large (around $50,000) hurdles for the "average investor" Google was supposedly targeting. That article, though, noted that Ameritrade and E-Trade didn't have those hurdles. Or, maybe they do. A reporter who signed up for an Ameritrade account to invest in Google was rejected by Ameritrade for no clear reason. He answered a bunch of questions truthfully, and about the only one that seems likely to have set off some alarm bells was his net worth. Still, it wasn't in the lowest bracket, and it certainly sounds like this guy could afford $500 on a few shares -- and he made it clear he knew what he was doing. Ameritrade, though, like all the other brokers refuses to explain how they pick who is eligible and who isn't. It makes sense to set up some eligibility barriers to avoid some speculators, but it's increasingly looking like Google's IPO for the average investor isn't really for the average investor at all.

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  1.  
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    Will, Aug 12th, 2004 @ 8:40am

    Maybe it's just Google

    Although a single factor shouldn't determine eligibility, I think it has more Google's confidence that they are here to stay and 'don't mess with our stock price' attitude that made them and our speculative investor friend (he answered that his investment objectives included speculative investments) in the article a bad match. I've read in a couple of places saying that Google really wants the bidding process to end up with a fair stock price and don't really want it to fluctuate much after it goes public.
    The closest thing I could find to support this (page 31 of Google's prospectus): "Many companies going public have suffered from unreasonable speculation, small initial share float, and stock price volatility that hurt them and their investors in the long run. We believe that our auction-based IPO will minimize these problems, though there is no guarantee that it will."

     

    [ reply to this | link to this | view in thread ]


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