Getting in on the IPO

from the IPO-trickiness dept

Dishing out access to IPOs has always been a tricky question, and the rule of thumb used to be if you could get into an IPO at offering price, then you didn’t want in. Now, more and more, companies are looking to reward customers or others by getting them into the IPO. First RedHat is offering some open source contributors access to the stock at IPO prices, and now jFax is holding a lottery for the same purpose. The problem with these is that the whole point of selling the IPO to institutional and experienced investors was to avoid scams. Offering it straight to retail investors gives companies the chance to pull one over on the investors, and trick them out of their money. I definitely think the “protectionist” attitude goes a little too far, but I also find it just a little scary that the folks who have access to these IPOs immediately assume that they are going to make boatloads of money. One of these days stocks will go down as well.

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