I want to know all the requirements(a-z) and the process involved if I want to buy shares from underwriters and the day company goes public.I know its not easy for an individual to get piece of stock from underwriters as majority of the shares goes to institutional investors.And is it really hard to get piece of shares from hedge funds,mutual funds,ETF etc?

I belong to India and I am unsophisticated and non-accredited investor.

What needs to be done pre-IPO.Anything not mentioned here should be assumed on your own.




1 Answer 1


I've not done it myself, but this is what what my discount brokerage says on the site:

  1. You have to deal with them over the phone, no internet orders.

  2. You have to fill out FINRA Form 5130 (FINRA = Financial Industry Regulatory Authority) and fax it in. This form is just a check off and a signature to confirm you are not a "restricted person" as defined by FINRA Rule 5130.

  3. After that, the brokerage also have their own standards of eligibility -- you answer some questions over the phone (what they ask is not mentioned).

In a nutshell, it seems FINRA rule 5130 restricted persons are (paraphrasing from the form):

  1. FINRA member firm or broker/dealer,
  2. officers & executives of same,
  3. agents of same, that are engaged in investment banking or securities biz.,
  4. person with authority to buy/sell securities for a bank, insurance firm, investment advisor, etc.
  5. person listed on schedules A, B, or C of form BD (with certain exemptions) - basically people that are already major owners,
  6. persons that own an interest in a company required to be listed on that form BD,
  7. a person acting as a finder,
  8. an immediate family member of a) any person that fits #2-#7 and supports, or gets supported by them, b) any person in #2-#3 that's employed by the FINRA member selling the new issue or c) a person in #5-#6 that is an onwer of the FINRA member selling the new issue

All in all, a lot easier than I thought it'd be before I looked.

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