When Do Commissions Become Bribes?

from the part-II dept

The second part in Red Herrings series of some of the fishier “behind the scenes” aspects of an IPO. This time they talk about paying significantly higher commissions (bribes) in order to get a larger allocation of the IPO. Basically, it’s a kickback. The firm getting the bigger allocation makes a lot more money, so they give some of it back to the underwriter as a “thank you” and do so in the form of a larger commission.

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