Absolutely not.
The maximum allowable profit that an underwriter can make from a public offering is the underwriting spread, which is included in the final offering price. If you see an issue that prices at $20, a built-in slice of that price is the compensation to the syndicate and selling group. This is the underwriting spread, which once negotiated with the issuer (by the managing underwriter) must be approved for reasonableness by the NASD Committee on Corporate Financing.
Like the 5% markup rule, it's a floating target, but generally 10% is seen as unreasonable. So, whereas for some issues, 7% might be acceptable, for others 7% might be deemed excessive.
Therefore, if stock ABCD goes public at a price of $15.00/sh and the CCF has approved a 5% underwriting spread, the company will receive $14.25 per share, and the syndicate will receive $.75 per share as their compensation.
Furthermore - and hopefully not confusing you more - in large offerings requiring large syndicates, that $.75 might be broken down between the managing underwriter, other underwriters, and selling group members in percentages. So, the managing firm might get $.15/share, the others (say 4) might get $.10 each, and the selling group members (say 5) might get $.04 apiece. These numbers, of course, represent the financial reward for (a) effort undertaken and (b) risk incurred in the transaction.
An underwriter may NOT profit from the premium that certain IPOs open at. Regulations address this directly (by the "freeriding and withholding" prohibition that directly addresses hot issues and registered individuals/SRO member firms) and indirectly (by the one year sale restriction pertaining to securities held or tendered by conversion of convertibles, warrants, or options).
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