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
What is a Western Account? A Comprehensive Legal Overview
Definition & Meaning
A Western account is a type of underwriting agreement used in the issuance of new securities. In this arrangement, each underwriter in a consortium is responsible only for the portion of the new issue they have agreed to sell. This means that if an underwriter is assigned a specific allotment, they are not liable for any unsold shares from other underwriters. Once they meet their sales target, their obligation in the offering is fulfilled. This contrasts with an Eastern account, where all underwriters share joint liability for the entire issue.
Table of content
Legal Use & context
Western accounts are primarily used in the field of securities law and finance. They are relevant in situations involving public offerings, private placements, and other financial transactions where multiple underwriters are involved. Understanding the differences between Western and Eastern accounts is crucial for financial professionals, especially when structuring deals or managing risk in underwriting agreements. Users can find templates and forms related to underwriting agreements through US Legal Forms to assist in these processes.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
For example, if a consortium of underwriters is tasked with selling a new bond issue of one million dollars, and one underwriter is responsible for selling fifteen percent (or one hundred fifty thousand dollars), they are only liable for that amount. If they successfully sell their allotted portion but the entire issue is not sold, they are not responsible for the remaining unsold bonds. This is a hypothetical example that illustrates how Western accounts function.
Comparison with related terms
Term
Definition
Key Difference
Western Account
Underwriters are only liable for their specific allotment.
Liability is limited to the underwriter's portion.
Eastern Account
All underwriters share joint liability for the entire issue.
Liability is collective among all underwriters.
Common misunderstandings
What to do if this term applies to you
If you are involved in underwriting or considering participating in a new issue, it is essential to understand the structure of the account. Review your responsibilities and ensure you are clear about your allotted share. For assistance, consider using US Legal Forms to access templates for underwriting agreements. If the situation is complex, consulting a legal professional may be necessary.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
A Western account is an underwriting agreement where each underwriter is responsible only for their assigned portion of a new issue.
In a Western account, underwriters are only liable for their specific allotment, while in an Eastern account, all underwriters share liability for the entire issue.
If you meet your sales target, you are not responsible for any unsold portions of the issue.