The Securities Litigation Expert Blog

IPO Churning - It Ain't What it Used to Be (And it Never Was)

Posted by Jack Duval

Jul 18, 2019 7:38:28 AM

I'm pleased to announce a new white paper entitled IPO Churning - It Ain't What it Used to Be (And it Never Was).

Over the years, I have participated in many IPO churning cases and have heard defense counsel argue that the client doesn't pay the commission and therefore there can be no churning.

This argument is just plain wrong.

Confusion about this issue arises from counsel not understanding the different types of IPOs commonly used today.  This white paper unpacks the different types of IPOs and shows how in almost all cases, the client pays the markup (commission) to the underwriters, not the issuing firms.

The paper also discusses:

  • How IPO churning has changed since the technology bubble and why clients are unlikely to make money in such a "strategy";
  • How prospectuses are used to solicit investors into IPOs;
  • The different types of prospectuses used;
  • Suitability, and;
  • Supervision.

To learn more about fiduciary expert Jack Duval, click here.


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Topics: supervision, IPO, Investment Suitability, FINRA Suitability Rule 2111, Suitability Expert, Churning, Section 2(a)(10), Section 15(c)(2)

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