Series 79 practice questionmediumUnderwriting Agreements
What is the primary purpose of the 'agreement among underwriters' (AAU)?
- ASet syndicate roles, commitments, and allocations✓ Correct answer
- BTo set the offering price for the securities
- CTo obtain SEC approval for the offering
- DTo define the relationship between the underwriters and retail investors
Explanation
Why A — Set syndicate roles, commitments, and allocations
The agreement among underwriters (AAU) is the contract that governs the relationship among the syndicate members. It establishes the lead manager's authority to manage the offering, each syndicate member's commitment to purchase a specified portion of the offering, and the allocation of the underwriting spread among the members. The AAU also typically includes provisions regarding stabilization authority, overallotment options, and indemnification among the syndicate members.
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