Syndicate

The syndicate group provides a vital link between salespeople and corporate finance.  Syndicate exists to facilitate the placing of securities in a public offering.  Syndicate also determines the allocations of bonds in a corporate or municipal debt offering.  Underwriting can be opened up to a bid process in which different investment banks compete to be the underwriter for an issue.  Once the underwriter is selected by using the competitive or negotiated method, the managing underwriter will select a number of other broker/dealers to assist in the selling of the issue.  This group is known as the syndicate.  With large offerings by a municipality or corporation, the managers will gather a group of broker/dealers that have large selling forces and form the syndicate.  With small offerings, the managers may only include one or two other broker/dealers to be in the syndicate.  The syndicate is made up of three group consisting of the underwriter or co-underwriters which includes a lead underwriter, the selling syndicate, and the selling group.  When an underwriting syndicate is formed, the syndicate members will participate in the offering based on a "eastern" account or a "western" account regarding the sales and accounting of the underwriting.  If the syndicate is formed under an eastern account method, all the members have undivided selling responsibility and undivided liability in the issue.  If the syndicate is formed under a western account method, each syndicate member has undivided selling responsibility but divided liability.