underwriter

un·der·writ·er   (ŭn'dər-rī'tər)    n.  One that underwrites, especially: a. A person or firm engaged in the insurance business.

Underwriter

A company or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body. An underwriter works closely with the issuing body to determine the offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's distribution network.

Investopedia Commentary

Underwriters generally receive underwriting fees from their issuing clients, but they also usually earn profits when selling the underwritten shares to investors. However, underwriters assume the responsibility of distributing a securities issue to the public. If they can't sell all of the securities at the specified offering price, they may be forced to sell the securities for less than they paid for them, or retain the securities themselves.

Related Links

Brokerage Functions: Underwriting And Agency Roles
IPO Basics Tutorial

See also: Eating Stock, IPO, Issuer, Prospectus, Red Herring, Underwriting

underwriter

An investment banker that acts to guarantee the sale of a new securities issue by purchasing the securities for resale to the public. Also called sponsor. See also agreement among underwriters, investment banker, lead underwriter.

Main Entry: un·der·writ·er
Pronunciation: '&n-d&r-"rI-t&r
Function: noun
1 a : a person (as an individual or a company) who underwrites an insurance policy : INSURER b : a person who assesses risks to be covered by an insurance policy
2 : a person (as an individual or company) who underwrites a security issue —compare ISSUER
NOTE: The Securities Act of 1933 requires dealers, issuers, and underwriters to file registration statements for the securities that they sell.