IPOs and New Issues

An initial public offering (“IPO”) is the first public issuance of stock by a privately held company. The company sells shares of its stock on an exchange such as the New York Stock Exchange or Nasdaq at an initial offering price set by the lead underwriter and the issuer. Once the shares begin trading, the company is said to have “gone public” and the price at any given time is determined by investor demand.

Companies may conduct an IPO for a variety of reasons. For example, a company may conduct an IPO to raise capital to fund future growth. In such an instance, a company would issue and sell new shares, which, all else being equal, would dilute the ownership of existing shareholders. Additionally, a company might conduct an IPO to provide liquidity to existing shareholders. In this case, the company would not necessarily be issuing new shares but rather would be facilitating the public offering and sale of shares belonging to existing shareholders. In such a case, and all else being equal, this type of offering would not dilute the ownership of existing shareholders who do not sell their shares.

To see current IPOs:

• Log onto your E*TRADE account at etrade.com
• Hover over 'Trade'
• Select 'IPOs and New Issues'
• To learn more about an offering view the preliminary prospectus
• Select the ‘Participate’ button on the offering you would like to participate in to begin the conditional offer to buy submission process

There are certain regulatory restrictions as to which customers may participate in an IPO. For example, FINRA rules prohibit "restricted persons" (certain persons associated with the financial services industry) from participating in the purchase of new issue offerings. However, any eligible customer who completes and passes an investor profile may submit a conditional offer to buy for an IPO.

To apply to participate in an IPO, customers need to meet the following initial criteria:

• Be a U.S. resident
• Have an active E*TRADE account
• Complete the Investor profile questionnaire in order to determine whether or not an account is eligible to participate in a particular offering

Eligible account types

• Individual
• Joint
• IRAs

Please view our full IPO FAQ page for additional information on how to participate.

Employees and all other account types are NOT eligible to participate in our equity new issue offerings.

The first step in the IPO process is the Investor Profile Questionnaire. Customers will need to complete an Investor Profile for the account through which they would like to participate in an offering. The Investor Profile will determine whether or not an account is eligible for participation in a particular offering based on a number of factors including investment experience, objectives, residency, financial background, and affiliations with the issuing company or other financial institutions. Due to regulatory requirements, all accounts deemed eligible to participate are required to access and acknowledge the prospectus prior to submitting a conditional offer to buy for an offering. The prospectus contains important information about the issuing company and the offering.

The primary determinant for which an eligible conditional offer to buy ("COB") will be allocated shares, and how many shares they will receive, is the amount of shares available for sale by E*TRADE versus the overall demand from E*TRADE customers during that offering. Shares are allocated to eligible accounts as a proportion, or percentage, of the size of their COB. The percentage is based primarily on the number of shares provided to E*TRADE for sale to its customers and the size of the overall demand for shares from E*TRADE's customers.

Given the generally high demand for shares in offerings (particularly IPOs) and the limited availability of shares available for sale to E*TRADE customers, many COBs will not be allocated shares. Additionally, in many instances, allocations will be significantly smaller than the size of shares requested in a customer's COB.

The demand for shares may exceed the supply available to allocate. A COB is not a guarantee an allocation of shares to any individual investor. Given the generally high demand for shares and the limited availability of shares available for sale to E*TRADE customers, many COBs will not be allocated shares. Additionally, in many instances, allocations will typically be significantly smaller than the size of shares requested in a customer's COB.