We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
Understanding Selling Group (Underwriting): Key Concepts and Functions
Definition & Meaning
A selling group, in the context of underwriting, refers to a collection of investment bankers and dealers who assist in the distribution of new securities to potential investors. These groups work alongside an underwriting syndicate to market and sell new issues of debt or equity. However, they do not take on financial responsibility for any unsold securities. The relationship and terms of engagement among the members of a selling group are outlined in a selling group agreement, which specifies the commission structure and conditions for termination, typically within 30 days.
Table of content
Legal Use & context
The term "selling group" is primarily used in the financial and securities sectors. It plays a crucial role in public offerings and initial public offerings (IPOs). Legal professionals may encounter this term when dealing with securities law, investment banking agreements, or regulatory compliance. Users can manage related processes using legal templates from US Legal Forms, which provide guidance on creating selling group agreements and other relevant documents.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A company planning to go public may form a selling group composed of several investment banks to help distribute its shares. These banks will market the shares to potential investors while adhering to the terms outlined in their selling group agreement.
Example 2: During a bond issuance, a municipal authority may engage a selling group to assist in selling the bonds to investors. The selling group will earn a commission based on the sales they facilitate but will not be liable for any bonds that remain unsold. (hypothetical example)
Comparison with related terms
Term
Description
Key Difference
Syndicate
A group of investment banks that underwrite a security issue.
Unlike a selling group, a syndicate assumes financial responsibility for the securities.
Underwriter
An entity that evaluates and assumes the risk of issuing new securities.
Underwriters bear financial risk, while selling groups do not.
Common misunderstandings
What to do if this term applies to you
If you are involved in a securities offering and need to establish a selling group, consider drafting a selling group agreement. You can find templates and resources on US Legal Forms to help you create this document. If the situation becomes complex or involves significant financial implications, consulting a legal professional is advisable.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.