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Beware of Possible Initial Public Offering Scandal and Protect your Investing Career
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Successful investors are knowledgeable about the “ins and outs” of the market. Aside from understanding the basics that surrounds the world of business venture, successful investors are knowledgeable about the moral conduct and implications of their conduct towards their business venture. In other words, in order to succeed on a particular investment, an investor must swear before his colleagues that he will conduct his business in a morally-upright way and within fair competition.
Let us take a look on the first characteristic of a successful investor. As mentioned earlier, he must be knowledgeable about the basics of business venture. He knows what are the things he needs to do before getting into business (business plan, appropriate strategies, advertising and public relation plans, and others) and how he will act appropriately on certain circumstances (such as shortage in production, increased business risk due to debt, and bankruptcy).
Supposedly you are in the situation wherein you need additional finances to sustain the increasing growth of your business operation. Where will you get such finances? Definitely, it is not ideal to borrow additional capital through lending institutions. The profit that you can generate from expanding your business operation will just be used to pay your creditors. Instead of profit, you will end up break-even (no loss, no gain). The efforts you have given are just wasted.
So how will you act appropriately on such circumstances? A successful investor will instead resort to going public, or what you called in the finance industry as “initial public offering”.
Initial public offering or IPO refers to the first sale of a company’s common shares to the public. Its principal purpose is to raise additional capital that will be used to sustain the growing expenditures of a particular company. It typically involves several investment banks that will act as the underwriters for the whole process. The company as the issuer will draft a prospectus containing all the necessary information about the company itself (background, history, financial status, and others) and will be submitted to the Securities and Exchange Commission for approval.
Once approved and the prices of the common shares are now finalized, such shares will undergo the free riding period wherein it will now be offered for sale to the public through various ways such as institutional visits and others.
Let us take a look on the second characteristic of a successful investor and then relate it to the conduct of the IPO process. If you think that scandal is just within the premises of the White House or within the legislative halls of the United States Congress, you are quite mistaken, for scandals also happens within the IPO process.
Nowadays, going public is no longer an automatic decision because of the scandals that have changed the landscape for IPO. Most of the personalities involved in such scandals turned out to be the losers now because of their immoral acts just to generate more profit out of the IPO process.
Want to know some of the corporate scandals that happened in IPO process? Take a look on the following:
• When AOL Time Warner went public in July 2002, the free riding period during the IPO process faltered, resulted to barter deals just to compensate the losses incurred, which is against the finalized price arrangements of their common shares.
• When Enron went public in October 2001, several corporate officials used illegal methods of acquiring wealth out of the IPO process by improper usage of off-the-books partnerships, bribed foreign government officials and representatives to win international contracts, and manipulated Texas and California energy markets. It resulted to the court conviction of their former corporate executives.
These are just two of several initial public offering scandals that happened during the recent years. Now, do you want to be a successful investor? If you want, then use the scandals happened as a moral lesson and do not commit the same mistakes or it will be the end of your investing career.
Initial Public Offering Listings News
TanzaniteOne to list IPO on Dar bourse in bid to renew licence - East African
 East African | TanzaniteOne to list IPO on Dar bourse in bid to renew licence East African The mining firm is waiting to be cleared by the Capital Markets Authority in order to list its IPO. Picture: File By ADAM IHUCHA (email the author) TanzaniteOne — a firm mining tanzanite gemstones in the northern part of the country — has announced ... |
Facebook IPO: Will they list on the NYSE or the Nasdaq? - Washington Post
 USA TODAY | Facebook IPO: Will they list on the NYSE or the Nasdaq? Washington Post NYSE Euronext and Nasdaq OMX Group Inc., rivals for almost every initial public offering in America, are competing now for what may be the biggest ever by a technology company. Winning it means more fees, a boost in trading and the chance to link their ... Facebook IPO Filing Not Expected To Identify Exchange For Stock Listing Nasdaq CEO still in talks with Facebook over expected IPO Facebook Expected to Keep Stock Listing Choice on the QT |
China bear-bile producer faces IPO backlash - Xinhua
China bear-bile producer faces IPO backlash Xinhua 11 (Xinhua) -- China's recent move to boost securities transparency by releasing a full list of applicants for initial public offerings (IPOs) has unexpectedly sparked public outcry over a medicine company that turns a profit selling bear bile. |
MCX Gets India Regulator's OK for IPO - Wall Street Journal (blog)
 Moneycontrol.com | MCX Gets India Regulator's OK for IPO Wall Street Journal (blog) The Securities and Exchange Board of India's approval for the IPO plan comes amid a fierce debate in India on whether or not to allow exchanges to list shares because of the conflict of interest between supervising trading and maximizing profit. MCX's IPO paper gets Sebi go-ahead MCX gets SEBI nod for listing shares |
Brazil: an IPO revival? Not so fast - Financial Times (blog)
Brazil: an IPO revival? Not so fast Financial Times (blog) But Seabras soon delayed its proposed R1.7bn offering for technical reasons and on Thursday, uncertainty clouded Brasil Travel's listing, with two reports saying the IPO had been pulled. Tourism company Brasil Travel Turismo and its shareholders ... Brasil Travel drops plan to seek share listing Brazil Tourism Company Brasil Travel Delays IPO |
Facebook IPO is biggest ever tech listing - ITWeb
 ITWeb | Facebook IPO is biggest ever tech listing ITWeb Social network giant Facebook aims to raise $5 billion in its initial public offering (IPO), making the company's listing the biggest ever in the technology industry to make a debut on a stock exchange. However, the company's IPO filing has come in at ... Facebook Said to Be Planning for IPO Filing on Wednesday Facebook IPO won't bring major status update Facebook IPO greeted by critical scrutiny |
Facebook afterglow lights up IPO markets - Reuters
Facebook afterglow lights up IPO markets Reuters By Ashutosh Pandey (Reuters) - The excitement generated by Facebook's IPO filing rubbed off on companies listing on US stock exchanges on Wednesday, with four of them seeing strong first-day gains. Caesars Entertainment Corp (CZR. |
Vodafone India IPO in the works: Analjit Singh - Times of India
 The Hindu | Vodafone India IPO in the works: Analjit Singh Times of India ... the local arm of global telecom major Vodafone Plc, is eyeing an India listing, said Analjit Singh, the newly-appointed non-executive chairman of the company. At present, the company is studying the possibility of an initial public offering ( IPO). Analjit Singh named non-executive chairman of Vodafone India Vodafone Names Analjit Singh India Unit's Chairman |