Robert, thanks for your comments.
Regarding your comment "Second, I thought the whole IPO program was to give some measure of democracy to the little guy."
Wrong! The IPO program is designed to generate interest in opening Etrade accounts!! Based on the number of people I know opening accounts because of the IPO hype (and, by the way, only because of it) I would say it is working. Right now the person who does the best with these IPO's is the one who is willing to refresh their browser more often then the other guy. Hardly what I would call "democracy", more like stuffing the ballet box.
Platinum users seem to get, more or less, emails at about the same time. There is a slight variation in this, but I believe this has more to do with variations in email servers being used and when they are posted. (i.e. Etrade prob. sends the email notices out at the same time, but platinum users get them at times slightly different because of the above.)
Anyway, the IPO process until Etrade broke it open used to be the realm of the Big Guy you are right. However, the Big Guy was mutual funds typically that bought in at the agreed price, and the rest of the shares were usually given to clients of the underwriter. It is typical in those cases for people with large accounts, say 500,000 or more, to sometimes be given only 30 or 40 shares or a hot IPO. So, Etrade giving 100 shares is amazing, particularly considering the history behind the process.
However, lets keep some rationality in this debate. I am sure you, like most who post here, trade enough to be either a platinum trader or at least basic power etrade. My concern is that some people are opening Etrade accounts ONLY for the IPO chance. They are not trading with etrade, and they have no intention of trading with Etrade. I honestly think if a guy trades 5 times a year with Etrade he should have at least a slight edge over a guy who NEVER traded with Etrade before at all. Or, do you think the guy who NEVER trades should be treated exactly the same as a guy that trades 1,000 times a year? As an Etrade stockholder I just can't buy that, because I don't care if Etrade loses accounts that never trade, but I DO care if they lose accounts that trade 300, 400, or 500 times a year. (And I know they have lost some Platinum customers already because they did not get shares.)
There are two approaches to a lottery system. One could be based on a method where each trade with etrade earns you a "point" which increases your chances of an Etrade IPO. This would be the most fair (even though I am Platinum (trade 300+ times a year with Etrade) I know I prob. would lose out in this system to EVEN MORE frequent traders, but as a shareholder it would be the best way to award the most valuable Etrade customers)
That system you seem to have trouble with. I assume it is because you do not trade often with Etrade, and fear that this would put you at a disadvantage. I can't blame you for acting in self-interest, just as someone that generates 8,000+ dollars a year for Etrade in trading revenue prob. is looking out for his own. :)
With that in mind, the other lottery system option could just be totally random. Meaning, the #1 Etrade trader (someone has to be) could lose out on an IPO to an Etrade account holder that has never traded. If this is your idea of "fair" our understanding of the word is quite different. |
