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The banks compete against each other on price - the company gets to freely choose the underwriter and they take price into account. Do you have evidence the ba

• davidw 9y ago
  > Do you have evidence the banks are colluding on price? Nope, which is why I wrote that I have no opinion on that. Edit: I think that very direct collusion would probably not be a stable arrangement, long term. But perhaps 'not competing too hard' between a low number of competitors with big barriers to entry is realistic. > Edit: to clarify, no the banks do not really set the IPO price. The banks offer different underwriting prices. The company ultimately chooses the price among the many banks' offers. That's still a way less transparent and market-oriented option than auctioning the shares. It's a hell of a lot easier for a few banks to be 'gentlemanly' in their competition than it is for lots of people trying to get some shares at an IPO via an auction. I mean, we're discussing an IPO that was "oversubscribed" at the set price, meaning money was being left on the table, right?