I am looking for information on whether or not this is illegal:
Opening a bank account with a privately owned bank, so that when the
bank goes public, the owners of the bank accounts are offered an IPO
offering, to purchase stock in advance of it going public, at a
discounted rate. When the stock opens on the market it greatly rises
in value and is sold at a great profit.
I know that financial advisors are recommending doing this, but is
this illegal. I think the SEC was looking into this, and seeing it as
questionable. I am interested in getting documentation that this is
illegal, so I need the sources |
Request for Question Clarification by
pafalafa-ga
on
01 Sep 2004 15:19 PDT
tiad-ga,
Your question has sparked my curiousity...Why would you think it
illegal to participate as a bank customer in an IPO?
It would certainly be illegal to use insider knowledge about a bank's
plans to go public as a way of profiting. But if you have the same
knowledge as John Q. Public (or to be fair, Jane Q. Public), and you
open an account, and are then invited to participate in an IPO, I
can't see where that would create any problem at all.
Can you tell us a bit more about your concerns in this regard...?
Thanks.
pafalafa-ga
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Clarification of Question by
tiad-ga
on
01 Sep 2004 15:33 PDT
I have an investment friend who gave me a list many years ago of
privately owned banks, and asked me to open up accounts for him.
Several have gone public, and he made a killing on the IPO. My name a
SS# are attached to these accounts, which I'm very uncomfortable with.
He's recommended this to many of his clients as well. I know it was
a questionable practice of the investment industry.
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Request for Question Clarification by
pafalafa-ga
on
01 Sep 2004 15:44 PDT
Ahh...that's a bit different.
Are you asking, then, about a future practice -- opening an account
under one's own name in the hope of catching an IPO?
Or are you asking about what you and your friend did, which sounds
like it was opening an account in someone else's name?
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Clarification of Question by
tiad-ga
on
01 Sep 2004 16:27 PDT
I'm asking because I don't want to be associated with any of these
accounts if they are for illegal purposes. Insider knowledge (I don't
think) came into play. I was just given a list of privately owned
banks.
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