4.1. Underwriting a Securities Issue

To execute and enforce the registration process laid out in the Securities Act of 1933, the SEC has enacted many rules that dictate how stocks and bonds can be issued and sold. Companies that are required to issue their securities in a public offering must follow a strict set of rules and procedures set out by the SEC. Private placements have their own set of rules. In this section we describe the process of registering and issuing new securities to the public.

Before selling shares to the public, a company must first engage an investment bank to act as its underwriter. An underwriter assists the issuer in administering the registration pr