Advanced English Dialogue for Business – Agreement among underwriters

Listen to a Business English Dialogue about Agreement among underwriters

Charles: Hey Brooklyn, have you heard about the “Agreement Among Underwriters”?

Brooklyn: Yeah, I think it’s a contract between underwriters who agree to share the risk and responsibility of selling a new issue of securities.

Charles: That’s right. It helps distribute the risk among multiple underwriters, making it easier to sell the securities to investors.

Brooklyn: So, why would underwriters enter into such an agreement?

Charles: Well, it allows them to pool their resources and expertise to ensure a successful offering, while also reducing the risk of any single underwriter taking on too much liability.

Brooklyn: I see. Does the agreement specify how the underwriters will share the profits and losses?

Charles: Yes, typically the agreement outlines the specific roles and responsibilities of each underwriter, as well as how the profits and expenses will be divided among them.

Brooklyn: Got it. Are there any potential drawbacks to this agreement?

Charles: One potential drawback is that it could lead to conflicts of interest among the underwriters if they prioritize their own interests over those of the issuer or investors.

Brooklyn: That makes sense. So, it’s important for underwriters to maintain transparency and act in the best interests of all parties involved?

Charles: Exactly. Transparency and integrity are crucial to maintaining trust in the financial markets.