In these sort of situations, the underwriters
(brokerages firms) guarantee the company involved
a certain amount of money. It is then up to the
brokerage firm to sell the shares to their clients.
If, for some reason (market crash, large drop in
the price of gold) the brokerage firm is unable to
resell the shares to their clients, the brokerage
firms are left holding the shares and taking a loss.
In all cases, the brokerage firms doing the underwriting,
feel that the price is right and they will have no
trouble in reselling the shares. You have to remember
that if the brokerage firms sell these shares to their
clients, and the price decreases, and another deal comes
along later, the client will not continue to buy into
these deals.
I understand that the shares of Kinross were sold quickly,
and some interested clients were unable to get all the
shares they wanted. This is very positive. |
