Series 79 practice questionhardSyndicate Formation
In a firm commitment underwriting, if a syndicate member defaults on its obligation to purchase shares, who is ultimately responsible for the unsold allotment?
- AThe issuer
- BThe SEC
- CThe managing underwriter and remaining syndicate members✓ Correct answer
- DThe selling group only
Explanation
Why C — The managing underwriter and remaining syndicate members
The managing underwriter and non-defaulting syndicate members are responsible for purchasing unsold shares. The issuer and SEC do not assume this responsibility, and the selling group does not purchase shares.
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