The Aftermarket

The period after a new issue is initially sold to the public is referred to as the aftermarket. During this time, the members of the underwriting syndicate generally do not sell securities for less than the offering price.

The principal underwriter is permitted to buy shares if the market price falls below the offering price. The purpose of this would be to support the market and stabilize the price against temporary downward pressure. If the issue remains unsold after a time (for example, 30 days), members can leave the group and sell their shares at whatever price the market will allow.6

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