Digital River IPO Message Board

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Technology Stocks : Digital River IPO

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To: g. chow who wrote (17)	8/1/1998 4:52:00 PM
From: Don Pueblo	Read Replies (1) of 20

I understand that there is a 60 day holding requirement when purchasing IPO issues from Wit. Not so. There is no "requirement" for anyone who purchases an IPO to hold it; that is against the law. The underwriting brokerage firms can "encourage" clients that buy the IPO to support the stock by not only not selling it, but buying more on the open. Funds that get IPOs have been known to dump them immediately, but there is an "unwritten rule" at brokerage firms that if a client dumps his IPO, he goes to the bottom of the list for the next IPO; that is, he might never see another IPO share in his life. This is simple self-preservation from the underwriter's point of view; they are expected to support the deal, good or bad. Exception: if the deal opens "hot" and runs up fast, like BCST for example, clients can sell; the stock has been "taken over by the street". The question is probably moot, since we can be sure the offering is way oversubscribed, and the shares have already been assigned to the brokerage firm's best clients. "Ordinary" investors would be very lucky to get 100 shares.

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