What an underwriter does when he/she can't find enough buyers and is forced to purchase the stock for his/her own account. To cover for risk associated with not being able to find enough buyers for an issue, underwriters charge an underwriting fee. Thus, even in an underwriter is "eating" stock, he/she might still make a profit on the deal. However, in the situation that a new issue is severely undersubscribed, the underwriter might make a loss on the deal.
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Eating stock often applies to underwriters of an initial public offering (IPO), if a certain level of subscription is guaranteed but is not met. This allows the company ...
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When an underwriter can't find buyers for a stock and therefore has to buy them for his own account. Eating Stock. The act of buying stock one is legally required ...
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Definition of eating stock: What an underwriter does when he/she can't find enough buyers and is forced to purchase the stock for his/her own account. To cover ...
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Definition of eating stock: Having to buy stock because there is a need to purchase but not a want to purchase. This happens when stockbrokers cannot find ...
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