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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.
What Is Initial Public Offering News
As Facebook IPO nears, the case for dull stocks - Boston.com
As Facebook IPO nears, the case for dull stocks Boston.com In a filing earlier this month, Facebook said it plans to sell a yet-unknown stake for $5 billion, the largest for an Internet company's initial public offering. The buzz is that the offering could value the whole company at as much as $100 billion ... |
Synacor IPO Opens Up 15% After Cutting Price >SYNC - Wall Street Journal
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Facebook IPO to Drag Down Secondary-Market Trading, Nyppex Says - BusinessWeek
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India's MCX to launch $125 million IPO - Business Recorder (blog)
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Harris Discusses Facebook IPO Impact on Employee Wealth - Washington Post
Harris Discusses Facebook IPO Impact on Employee Wealth Washington Post 10 (Bloomberg) -- William Harris, founder and chief executive officer of Personal Capital Corp. and former CEO of PayPal Inc. and Intuit Inc., talks about the impact of Facebook Inc.'s initial public offering on the wealth of its workers. Taylor Says Payvment Sees `Huge Business' on Facebook |
The Facebook IPO: Marketing, hypocrisy, and arrogance - Fortune
 Fortune | The Facebook IPO: Marketing, hypocrisy, and arrogance Fortune While there are all sorts of rationalizations for having such a small public offering relative to a company's size, the real reason, as any Street insider will tell you, is to create an initial shortage of stock so that the share price runs up when ... More Facebook SEC Filings Offer New Insight Ahead of IPO Critic: Facebook's Zuckerberg has too much control Facebook Details Bonuses for Top Executives |
HomeStreet Shares Climb Following Initial Public Offering - Wall Street Journal
HomeStreet Shares Climb Following Initial Public Offering Wall Street Journal By Lynn Cowan Of DOW JONES NEWSWIRES The third try was a charm for lender HomeStreet Inc. (HMST), which posted trading gains on its initial public offering Friday after two previous attempts to come public failed. HomeStreet, which postponed its ... HomeStreet completes IPO, raising nearly $80M HomeStreet prices IPO at $44/share-source HomeStreet, Inc. Announces Pricing Of Its Initial Public Offering Of Common Stock |
Brasil Travel Cancels IPO as Dozens Companies Wait to Offer - BusinessWeek
Brasil Travel Cancels IPO as Dozens Companies Wait to Offer BusinessWeek 10 (Bloomberg) -- Brasil Travel Turismo e Participacoes SA canceled an initial public offering, citing “unfavorable” market conditions, as the operator of the country's stock exchange says dozens of other companies are waiting for sentiment to improve ... Brasil Travel drops IPO plan as demand wanes Brasil Travel Cancels IPO After Investors Demand Owners Retain More Shares Brazil: an IPO revival? Not so fast |