Financial Markets and Institutions (2-downloads)

Underwriter

Market Share (%)

1. J.P. Morgan

9.5

2. Barclays Capital

7.4

3. Bank of America - Merrill Lynch

6.9

4. Citi

6.3

5. Deutsche Bank AG

5.9

6. Goldman Sachs & Co.

5.5

7. Morgan Stanley

5.3

8. Credit Suisse

4.8

9. HSBC Holding PLC

4.2

10. RBS

4.0

Total

59.8

Source:

http://www.thomsonreuters.com

.

---

548

Part 6 The Financial Institutions Industry

New Securities Issues

Information about new securities

being issued is presented in distinc-

tive advertisements published in the

Wall Street Journal and other news-

papers. These advertisements,

called “tombstones” because of

their appearance, are typically

found in the “Money and

Investing” section of the 

Journal.

The tombstone shown here indi-

cates the number of shares of stock

being issued (24,636,659 shares

for Google) and the investment

banks involved in selling them.

F O L L O W I N G   T H E   F I N A N C I A L   N E W S

they list all of the investment banking firms included in the syndicate. Review the

tombstone reproduced in the Following the Financial News box. The ad states that

this is neither an offer to sell nor will offers to buy be accepted. The actual offer to

sell can only be made in the prospectus. Also note the different investment bank-

ing firms involved in the syndicate.

---

Chapter 22 Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

549

The longer the investment banker holds the securities before reselling them to

the public, the greater the risk that a negative price change will cause losses. One

way that the investment banking firm speeds the sale is to solicit offers to buy the

securities from investors prior to the date the investment bankers actually take

ownership. Then, when the securities are available, the orders are filled and the secu-

rities are quickly transferred to the final buyers.

Most investment bankers are attached to larger brokerage houses (multifunction

securities firms) that have nationwide sales offices. Each of these offices will be

contacted prior to the issue date, and the sales agents will contact their customers

to see if they would like to review a prospectus on the new security. The goal is to