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    Underwriting Due Diligence

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    Before entering a formal agreement, investment bankers carefully investigate the companies whose securities they underwrite; this is especially true of the issues of firms going public for the first time. Since the bankers do not themselves plan to hold the securities but intend to sell them to others as soon as possible, why are they so concerned about making careful investigations?

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    https://brainmass.com/business/finance/underwriting-due-diligence-127915

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    Investment bankers need to carefully investigate the companies whose shares they plan to offer to the public to ensure that the companies are fair, free from frauds and manipulations and not duping the investors. Since investment bankers are in the market to stay for a ...

    Solution Summary

    Before entering a formal agreement, investment bankers carefully investigate the companies whose securities they underwrite; this is especially true of the issues of firms going public for the first time. Since the bankers do not themselves plan to hold the securities but intend to sell them to others as soon as possible, why are they so concerned about making careful investigations?

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