United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1996-06-06 monographic deposited born digital 27 p. GA 1.13:GGD-96-5 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-96-5 P0b002ee180377a5a f:gg96005 DGPO 2010-08-12 2011-03-24 GAOREPORTS-GGD-96-5 machine generated eng fdlp REPORT GAOREPORTS-GGD-96-5 GGD-96-5 Securities regulation Financial institutions Brokerage industry Information disclosure Stocks (securities) Ethical conduct Crimes or offenses National Association of Securities Dealers Central Registration Depository Letter Report GGD

GAO addressed concerns about the initial public offerings (IPO) allocation process, focusing on: (1) the factors that influence underwriters to sell IPO shares to institutional investors and individual investors; (2) disclosure requirements concerning the history of disciplinary actions taken against an underwriter; and (3) Security and Exchange Commission (SEC) rules governing the IPO market.<p/>GAO found that: (1) most underwriters primarily sell IPO to institutional investors because of economic factors and their belief that these investors can buy larger blocks of IPO shares, hold their investments longer, and assume greater financial risk; (2) underwriters market IPO to individual investors when their firms have a high percentage of individual investor clients, the company is well known to individual investors, or institutional investors have little interest in the IPO; (3) SEC and National Association of Security Dealers (NASD) give underwriters wide latitude in marketing and allocating IPO shares among institutional and individual investors; (4) SEC does not require companies to disclose in their prospectus certain information about their underwriters' criminal or disciplinary histories except when market manipulation and fraud are involved; (5) SEC and self-regulatory organizations imposed 25 formal disciplinary actions for securities violations on 13 of 34 underwriting firms for the 5-year period prior to issuance of IPO; and (6) SEC could provide investors a better means of assessing risks associated with IPO if it required companies to disclose material information on underwriters' disciplinary histories in their prospectus. https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-96-5/html/GAOREPORTS-GGD-96-5.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-96-5/pdf/GAOREPORTS-GGD-96-5.pdf GAO/GGD-96-5 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-96-5 Letter Report GAO/GGD-96-5; Initial Public Offerings: Guidance Needed on Disclosure of Underwriters' Disciplinary Histories; Securities regulation Financial institutions Brokerage industry Information disclosure Stocks (securities) Ethical conduct Crimes or offenses National Association of Securities Dealers Central Registration Depository Title 31 Section 720 31 U.S.C. 720