Series 79: 7.1.5. The Selling Group

7.1.5. The Selling Group

Recall that a selling group is made up of broker-dealers who help market the offering, but do not share financial responsibility for unsold securities. For this reason, selling group members are not underwriters of the offering. This is in contrast to syndicate members, who are actually underwriting the offering because at some point they will actually own the securities (hopefully briefly). This is why selling group members get a smaller share of the spread.

A selling group may be used whether the underwriting commitment is firm or best-efforts. Firm commitment underwritings may have both a syndicate and a selling group. Selling group members are also called selected dealers. The blanket term distribution participants (or just participants) can be used to refer to underwriters, selling group members, or both.

A selling group agreement, also called a selected dealers agreement, describes the terms of