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Red Hat Software Businesses

Barred from Red Hat IPO? 284

Posted by CmdrTaco from the this-ain't-fun dept.
Anonymous Crow writes "I was wondering how many other people out there are in the same situation: I was lucky enough to get "invited" to participate in the Red Hat IPO, but after I opened an account and moved my money I was told that I'm ineligible for the IPO... because I have no stock-trading experience. I opened an E-TRADE account for this purpose, and moved $1400 there to buy Red Hat stock. When I attempted to place my "indication of interest" (which is how you get into an IPO on E-TRADE) I had to answer a bunch of questions stating I'm not an employee of a stock-trading firm, not an employee of Red Hat, etc. And, by the way, how much stock I own and how ofter I play the stock market. After answering these questions the E-TRADE oracle apologized nicely and informed me of my ineligibility. Now, those of you that do this often are probably chuckling at my naivete, but honestly: I'm a linux geek, not a stock trader. Isn't it ridiculous to "invite" a bunch of linux geeks to buy Red Hat if only experienced traders are eligible? And shouldn't Red Hat have known better? " (I've had at least a dozen people contact me with exactly this problem)
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Barred from Red Hat IPO? More

Barred from Red Hat IPO?

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  • I guess all the stink has made some minds change.


    Dear Red Hat Community Member,

    Thank you for your interest in participating in Red Hat's initial public
    offering. We are aware that you have recently not passed the online
    eligibility profile. Understandably, you are probably frustrated,
    especially if you feel you've entered a response in error.

    We are required to determine whether a customer is suitable to participate
    in initial public offerings (IPOs), which are speculative in nature. Our
    online eligibility profile allows us to gather important information about
    your investment experience, goals and financial background, in order to
    determine your suitability in purchasing IPO shares.

    If you feel you've entered your responses to the eligibility profile in
    error, please feel free to call us at 888-707-8680 and use the PIN 4263.
    One of our specially-appointed customer service associates will be happy to
    assist you in updating your profile.

    Thank you, again, for your interest.

    E*TRADE Securities, Inc.

  • "I lump day-traders with active-traders who have a high year-to-year turnover ratio in their portfolios."

    You can lump them together all you want, but
    day traders != active traders. Day traders are
    people who typically buy and sell a stock the
    same day. Active traders are... ambiguously defined.

    "What will you be doing when we hit a bear market"

    Selling short?

    "With your online account, if something bad
    happens you run the risk of not being able to
    touch your assets for up to 60 days."

    Please define what you mean by "something bad."

    "You ARE going to get rich with a fundamental buy,
    hold and accumulate method."

    What about when we hit this bear market that
    you're predicting? I'd hate to be 'holding' and 'accumulating' at that point...

    "You are a beneficiary of an incredible Bull
    Market. That does not make you an expert in
    stocks."

    I guess we won't know how much of an expert your
    broker is either until we hit a bear market, then,
    right?

    -WW

    --
    Why are there so many Unix-using Star Trek fans?
    When was the last time Picard said, "Computer, bring
  • 1) Etrade does not have any new policies here. Check out their IPO FAQ.
    2) 1400.00 is not going to cut it as it is most likely that when "buy" happens it will NOT be at the original offereing price. Basically you put in an "intent" to buy and they allot shares but you pay the price of whatever the stock is at that moment.(And they allot 100 shares only then proceed to next person on list in round-robin)
    3) You can not buy IPO stock from a lead underwriter..hello insider trading...they are barred from it.

    Before you go on slamming Etrade you should do your research. You do realize that when all these uninformed people sell after their stock just doubled! that it will fall through the floor. (ex Juno)
  • I've stopped using E*Trade because of these type of things. I decided to open my account with Charles Schwab and I have had no problems with getting in on the IPO. I don't believe the SEC cares as much but since I'm not a finance person I couldn't figure out. But Schwab did it for me with out a hitch nor problem.

  • I recently started doing the stock thing, and tried to get in on the supposed 16-18 dollar ipo of mp3.com a couple days before it went on sale. I couldn't open an account with etrade or charles shwab in that amount of time. Both required a printer (which I don't own), and at least 3-5 days, possibly as long as 20 days the fine print said on one of them. The charles Schwab office wouldn't let me buy stock at the ipo price unless I had an account with them for a half million and was making 4 trades per month. . . I eventually got an account at dljdirect. and was able to place an order (not for mp3.com and my desire for that stock faded when it was said to open at 28) the same day with up to 15,000 credit. trades are 20. more expensive than etrade, but i don't have to have a minimum amount in the account, and didn'y have to wait at all, or own a printer. look into it if you are in a hurry to get an account.
  • I did just what a bunch of people did -- as soon as I heard of the IPO, sent an application and check to etrade, also transferred an account.
    (Transfer won't be done in time, hence the check.)

    I was told just now --

    1) You can't even "express an interest" yet.

    2) There will be a 2 hr period when you can express interest and fill out the elegibility info.

    3) You won't know which 2 hours. There will be no announcement ahead of time. You need to be logged
    in to catch it. You may not even know which day.

    4) It's meant to be random. etrade handles all
    their IPOs this way.

    I would be annoyed at not qualifying, but I'll be
    enraged if their definition of random means I
    miss the 2 hr window and don't get a chance
    to qualify. In that case I plan to bail
    out of etrade (to datek, which has worked well for me).
    I told him so. Maybe if we all call,
    they'll get the message. It's one thing to loose
    the lottery. It's another to be denied a chance
    to buy a ticket.

    Long pig.
  • Dear Red Hat Community Member,

    Thank you for your interest in participating in Red Hat's initial public
    offering. We are aware that you have recently not passed the online
    eligibility profile. Understandably, you are probably frustrated,
    especially if you feel you've entered a response in error.

    We are required to determine whether a customer is suitable to participate
    in initial public offerings (IPOs), which are speculative in nature. Our
    online eligibility profile allows us to gather important information about
    your investment experience, goals and financial background, in order to
    determine your suitability in purchasing IPO shares.

    If you feel you've entered your responses to the eligibility profile in
    error, please feel free to call us at 888-xxx-xxxx and use the PIN xxxx.
    One of our specially-appointed customer service associates will be happy to
    assist you in updating your profile.

    Thank you, again, for your interest.

    E*TRADE Securities, Inc.

    Now, they wouldn't be telling us "lie this time so we can give you the stock and shut you guys up", would they?

  • One of the things they try to avoid are people out to make a killing on short term gains. It's in a FAQ or something on E*trade, so they try to screen out people who will buy in on the IPO and sell hours/days/weeks/months later.

  • Red Hat and E*Trade don't have anything to do with it really. They invited you to participate, but if the SEC won't let you do so, there's nothing else they can do about it.

    That is fine, but it would have been nice if they had made it clear what the eligibility requirements were. The only way to find out was to open an account, afaict.

  • Because it could hurt RHAT in the future. While it is true that the stock price doesn't directly affect the company once the company goes public, having a strong stock can significantly lower one's cost of capital, which is VERY important to rapidly growing companies.
  • More like cooking the goose.

    An IPO is a great opportunity for you to lose a huge wad o' cash, removing yourself and a substantial number of those you tell your story to from the market, while paying a small commission. E*Trade, and the whole investment industry, would rather have you make a series of less speculative investments adding up to much more money, and lots more commissions.

    The fat cats LIKE the unwashed masses. The unwashed masses bring in lots of little piles of money.


    Fear my wrath, please, fear my wrath?
    Homer
  • of course they knew who were and who were not eligible. it is so amusing to watch the naivete and innocence of the free software community. all you forget that when you enter the realm of commerce, suits and bureaucracy, the only substance is "stuff that matters" - yes, you guessed it right - money and profit, that is. and the closed realm of suits, like the every dynamic system surrounded by hostile milieu, has developed the system of mechanisms for protective equilibria, which ensures sutainability. one of the main mechanisms is the means of keeping outsiders out. this has the century-long history, just remember the mediaeval institutes of meisters, the closed guilds of merchants, etc., etc.

    so, people, live with it and be happy to donate them your code. dont call them thieves, by any means, they dont like this. better go buy their products.
  • I did this. I have a funded account. When I click on the new username, I get a new window that says "No accounts are currently available". I don't know whether "accounts" means mine or that no more "expression of interest" submissions are available.

    Steve
  • I lump day-traders with active-traders who have a high year-to-year turnover ratio in their portfolios. Mutual fund managers count in this (for me at least).

    High diversification is ONE reason why fund managers perform meagerly. Another, is because they ARE active traders. The average mutual fund in America sees a 100% turnover per year. While they may not be trading high numbers per day (that would be a hedge fund), they trade too much to outperform.

    We have also had 9 straight years of the greatest bull market in history. Essentially, you could have thrown your money at anything and made money. That is a reason why day-trading and online brokerage firms have prospered so well.

    What will you be doing when we hit a bear market (and believe it or not, they are possible!) with your calculated risks? A broker is there to insure you do the right thing, but more importantly, he is available for you. With your online account, if something bad happens you run the risk of not being able to touch your assets for up to 60 days. That's right, 60 days.... check the small print of your agreement.

    You ARE going to get rich with a fundamental buy, hold and accumulate method. It is a fact that this method, throughout the 500 years of stocks, is the BEST method towards becoming rich.

    You are a beneficiary of an incredible Bull Market. That does not make you an expert in stocks.

  • Don't forget the investment income that ETrade gets from those accounts. Imagine this: 1000 people send $1,000 and cancel the accounts a week later. ETrade waits a week and mails them a check, which takes a week to arrive and clear. ETrade would make a nontrivial amount of money from the deal. I'd LOVE to have $1E6 in my 4% APR savings account for three weeks, and I'm sure that ETrade earns a much higher rate.
  • misleading, many people offered this special 'deal' are ineligible.
    Really, what did you expect from a spammer?
    Remember the reasons many dislike spammers is that they lie, cheat, steal, are misleading, and quite generally BAD people to deal with.

    See what happens when you support a spammer? they screw you.

    You did it to yourself.
  • It's unfortunate that you're feeling burnt by this, but I really think that it is out of Red Hat's control. E*Trade is one of the underwriters (I think that's the right term...) for this IPO, and they can sell their shares as they wish.

    It's cool that Red Hat set aside shares to target people in the community, but let's face it - online investing takes a fair amount of money. If you can't get the $1k there in time (actually, you probably need about $1.5k to participate in the IPO), and if your current personal finances aren't such that you could afford to lose that money, then it might be better that you not participate.
    Especially if you think that they were "dangling money in front of your face." They were doing no such thing - IPOs are not sure-fire gains. Lots of them are, some of them aren't.

    I don't know your situation, of course, but who's going to feel more "burnt" - the student who scrapes together $2k from his college job and loses it all when RHAT tanks (which it might) or the college student with $5k in the bank who is screened out by E*Trade, and is unable to participate?

    There *was* mention of this screening process in the offer letter that was sent out. I don't know the details of the process, so I'm not sure how much wealth/experience they're looking for. There's a thread over at www.techstocks.com on this subject... It's a bummer, but I can see both sides of the argument. I wouldn't take it out on Red Hat, though. This has a lot more to do with E*Trade than with Red Hat.
  • Thats absolutely ridiculous. If they send an invitation, then they shouldnt try to stop you after that.

    Thats like inviting someone over to a party, and when they get there ask them "Do you go to many parties?" When the answer is no, they get shoo'd away.

    What a waste.
  • What do they care? as long as you have the dough and can prove it what does it hurt? Who are they trying to protect?

    -Al-
  • Well, I was barred as well -- after bitching and moaning, they gave me a second chance -- so, all you guys out there -- if you complain enough, you can get them to give you a second chance on the indication of interest



    I hate to rat out a guy who did me a favor, but he also indicated that I could very easily commit fraud, and lie on the application. E*Trade wouldn't check.




    I don't know about you, but I'd take this as *encouragement* to lie (commit fraud? I think they take it as an affidavit, though I'm not sure) on my application.


    Well, being the honest (stupid?) person that I am, I didn't do so the second time around -- and while my answers were different and spun a little more in my favor -- I still got denied.




    At the very least, this is bullshit.


    At the very most, I think the SEC needs to have a chat with E*Trade about its policies.
  • just out of curiosity, how are they giving the people on "the list" special permission beyond anyone who can try to get in early on IPO's through e*trade or witcapital or anyone else who lets you try to do that on a fairly regular basis...obviously you are logged in to your etrade account, but how does redhat communicate to them of "hey, this guy is our special buddy, let him in"...
    -Matt Jankowski

  • Generally, I'm against this kind of "protection," but having been an inexperienced trader for a while now, it's easy to see why they do this. I remember one day where NASDAQ was going through one of its usual tech stock run-ups, and there was one stock (I can remember which), but at one point, there was a HUGE difference between its bid and ask prices...we're talking several dollars here. This is, for the most part, rather unusual, but if I had been one of the unlucky investors that had my order executed at that high ask price, it would have immediately been worth substantially less. There are all kinds of weirdness that can happen, and if you don't know about them, you can end up screwing your self fairly easily. Fortunately, I only lost a few dollars on that one.

  • SEC Requirements (Score:5)

    by Caballero ( 11938 ) <daryllNO@SPAMdaryll.net> on Wednesday July 28, 1999 @07:47AM (#1778553) Homepage
    The securities and exchange commission (SEC) is protecting you from yourself and fraudulent investment brokers. IPOs are considered extremely risky investments. You have to demonstrate (via the form) that you are qualified to invest in such things. That typically means a certain amount of trading experience, that you're not investing too large a percentage of your net worth, etc.

    Red Hat and E*Trade don't have anything to do with it really. They invited you to participate, but if the SEC won't let you do so, there's nothing else they can do about it.

    - |Daryll

  • I've seen a few comments about "I want to own some Red Hat stock" --- well, guys; bear in mind what you're being qualified for is the IPO, not the stock. Anybody who has a trading account with any broker can place a market order to buy as soon as they are trading. Sure, you won't get the IPO price -- but you will get some stock, if you really want it. And if you planned to buy cheaep at the IPO and then sell on the first big swing, that's why they don't want you to participate anyway...
  • Well it is actually because of the fact that somebody (NOT Redhat, but rather E*Trade or SEC) is trying to protect you from 'losing' your money in a 'risky' investment by regulating who can participate.

    Hal Duston
    hald@sound.net
  • Oh great... Something else to beat up on Red Hat for. Not only are they too commercial and ready to become the next micros~1 of Linux, they also steal candy from babies and fool poor coders into thinking they'll become millionaires. (/sarcasm off)

    There are financial realities at work here, folks. Not everyone will be able to participate. Red Hat certainly didn't know who would and would not have the necessary funds and experience to participate. They sent out the letter to a ton of people, which was a generous thing to do. Those who can take advantage of it will. Unfortunately, the Nasdaq is not free as in speech and it is not free as in beer, and some people will be left out. There's nothing that Red Hat can do about that.
  • I am not aware of any age requirement for buying a car. Anyone can contract with a minor, they do so at their own peril since contracts with minors are not enforcable. The only property restrictions that I am aware of involving age are for alcohol, tobacco, and firearms.
  • I don't follow this argument.

    If RedHat sells the shares for $13, they get the $13. After that, the price the shares trade for is irrelevent, surely? It may have a affect another share offer, but that must be some way down the track now, and hopefully the share price will even out after the first few days.

    We've had several "Mums and Dads" floats in this country (Australia) where people were doing just this - hasn't seemed to hurt demand for the next tranche of shares...
  • We could figure out the criteria, given enough data points.... Here's my data (I was rejected):

    household income: $25k-75k
    liquid net worth: $20k-25k
    total portfolio: $10-20k
    investing time....
    stock: 2+ years
    options: 2+ years
    mutual funds: 0
    IPOs: 0
    US Treas: 0
    Municip Bonds: 0
    Corp Bonds: 0
    Knowledge of investing: good
    Understand market is volatile? Yes
    objectives: aggressive growth, growth
    not affiliated with anyone in stock market

    I opened a new Etrade account with $4500.

    RESULT: rejected.

  • You might view this as exclusionary, but it is a big step up from the old days when none of you peon-whiners would stand a chance at getting in on this or any other IPO.
  • The thing you need to remember is that it is very difficult to get into an IPO. In Initial "public" offering, "public" is almost a bad term. You have to know some of the big broker to get in on an IPO. The good news...yes prices usually soar from the IPO price to the thirty days out, but this is still a small percentage of what a good stock will be worth (thats where the risk of investing comes in). The other good news is that if you watch closely, market "corrections" and lowered interest after the IPO will often bring the prices back down to a very attractive level. Sweat not my fellow linux lovers, don't discount Red Hat stock just because you can't get in on the IPO, most people can't.

  • Yes. I called E*Trade and spoke with a live broker, who said I had to take the test, and I failed it. She was just reading off the test from the web site and filling it out for me, pretty much.
  • That's why I didnt' cash in the money I've been carefully stowing away for the IPO.

    I used to work at a brokerage. Let me tell you...there are almost ALWAYS fees associated with closing out an account. The minute I saw all the shit that E*Trade was throwing at me just for the high honor of taking my money, I knew something was wrong.

    Also: WHY would one need experience trading in the case of volatile stocks **in one's field of expertise?** ((---note caveat

    Seriously. Most of the old brokers I used to work with didn't know their butts from their elbows when it came to ANYTHING with an "on" switch. Yet they were being trusted with huge personal accounts to work IPO stocks and tech stocks all the time. If RH saw fit to invite "the community" to the IPO, then the community should be assumed to know enough about what they are buying.
  • that's not true.

    --

  • So you will be selling short when we hit a bear market eh?
    Well that is handy... Great thinking!

    By something bad, I am speaking of a correction, crash or bear market.

    Using a fundamental approach to buy, hold and accumulate, is extremely beneficial during a bear market. With this philosophy, you do not look at a crash or bear market as a time to sell, get out of the market or sell short... you view it as a time to accumulate. All of these great companies are now on sale, buy more!!!

    With hindsight, we know that we should have bought when the market "crashed" in October 1987, falling to 1600 on the Dow. But how many of you would still have liked to have bought in August 1987 when the Dow was extremely over-valued at 2700, and held on during the crash (or even better, accumulating more)and still own those securities today when the Dow is over 10,000.

    "Reacting" to a bear market or crash can often be the worst thing you do.
  • That's all well and good, but this is exactly what "the letter" is offering -- a way around this. They've reserved a certain number of shares for community members.

    --

  • This is something completely different than your broker/consultant profiting on the spreads. That simply is not how it works.

    The fact that a broker/consultant can get you a better price is one of the advantages of having a broker... not a method for him to make larger profits than you!
  • Basically the idea behind an IPO is to sell the underwritten shares of stuck to fund the company for growth and immediate short term needs. If 5,000 joe schmoes buy in at 13, and sell at highest bid on opening day that would be an average of 50,000 shares sold and bought and still bouncing around on opening day. The purpose is for funding the company, and in order for this to work there has to be long term investment within redhat.

    Just because you can't buy 100 shares and make a quick few thousand bucks doesn't mean E*TRADE is trying to screw you over. If you had a 50,000 dollar investment then that is something the company will benifet from. The average joe would sell immediatly if the stocks went from 13 to 50.00 but an investment firm would hold off for the long run as its cheaper for them to hold up money in investments and such and it offers a higher profit margine then savings and CD's

    There is *no* such thing as a free meal, and i personally laugh at everyone of you out there bitching about not getting in on the bandwagon. Its not about YOU getting the money, its about RedHat and the underwritters getting the money. When the stocks settle, well then you can take ownership in part of redhat. but if even 5,000 people are buying 100 shares a piece and 50,000 shares of stock are floating around, its not good at all. The price would be to volital and the market would most likely drop below value or never reach its initiall estimated value and loose money on the IPO. 5,000 is a small #, i'm sure more people then that want in on the IPO bandwagon, so the numbers could be even larger.

    You should be proud to own part of Redhat as a company, and not expecting to get rich from it. Hell i've written stuff for linux, i've installed many servers, and i wish i could get rich quick too. but geezus, give the market the faith its been running on for years and shut your whinny traps.
  • A certain number of RH shares have been specially set aside for certain (random, apparently) members of the community.

    --

  • That would be "the right to petition the government for redress of grievances" -- and yes, it's one of those big important things on the short version of the list. Unfortunately, our elected personages view that list as a major inconvenience to their plans, and tend to infringe on it at their whim, and let the Supreme Court decide whether to slap them down for it. A pity.

    (wandering offtopic)

  • I'm sure somebody has mentioned this:
    The "Oracle" is not E*Trade (nor RedHat).
    It has something to do with SEC/NASD or so
    I've been told.

    I think what E*Trade did screw up was in not
    providing clearly definitions for the questions.

    In particular such questions like:
    "What do you feel your overall expertise at
    trading is?" Excellent? Good? Fair? Poor?
    That is highly suggestive. Compared to just
    about everybody else where I work I'm a genius
    at investing. But compared to Tom and Dave
    Gardner, Alan Greenspan or Peter Lynch I pretty
    much suck.

    E*Trade should have a *very* easy to find,
    must-read FAQ on exactly what the questions
    mean. As in definitions for what "Good
    experience" is.

    And for those out I would recommend placing
    your indication of interest directly through
    a human broker at E*Trade. I did and he
    cleared up several points such as that.

    For one: "What is the amount of liquid assets
    you own?" Silly me: I thought "liquid" meant
    "cash" or anything that you can directly write
    a check against without incurring debt. Well
    I've I'ld have answered that I'ld have killed
    myself. I don't keep more than a couple
    thousand in such accounts (checking mostly).
    But what "liquid" really means is: "Cash or
    *anything* that can quickly and easily be
    converted to cash." This includes any mutual
    funds you may have, stock securities, checking,
    savings... Basically it turns out to be my
    entire portfolio minus my house, automobiles
    and IRA/401Ks.

    If you don't have a large amount of liquid
    worth then the SEC will mark you ineligible
    because you cannot afford the high risk of
    IPOs. If it were to go very badly for you it
    would wipe out just about everything you own
    except the roof over your head.

    I know it sucks, I really do. I learned these
    lessons the hard way before. I encourage anybody
    who went through this to write a simple letter
    to E*Trade asking them to make available much
    clearer documentation on the IPO process and
    questions.
  • It is unbelievable how ignorant the above statements are.
    This is absolutely not how things work.

    It is not called the fill... it is called the spread.

    Brokers do not make any money off the spread... PERIOD.

    Everything you have said is completely false.
  • I've been burned by this same scenario, I tried to sign up for the priceline.com IPO on e*trade and was locked out for "incorrectly" answering the questionaire. What I'd like to know is why in the world do they have that questionaire instead of a simple legal form that says something along the lines of "I know this is a risky investment, I only hold myself liable for any losses incurred and really really promise not to sue if I get wiped out". Seems to me that type of form accomplishes the same goal, in a much more direct manner.

  • So, attached is what was waiting in my mailbox this morning.

    Is there an attorney out there who can tell us if we have grounds for a class-action lawsuit?

    Date: Wed, 28 Jul 1999 13:42:57 -0700
    From: Jason Saxon
    Subject: Redhat Community Member

    Dear Red Hat Community Member,

    Thank you for your interest in participating in Red Hat's initial public offering. We are aware that you have recently not passed the online eligibility profile. Understandably, you are probably frustrated, especially if you feel you've entered a response in error.

    We are required to determine whether a customer is suitable to participate in initial public offerings (IPOs), which are speculative in nature. Our online eligibility profile allows us to gather important information about your investment experience, goals and financial background, in order to determine your suitability in purchasing IPO shares.

    If you feel you've entered your responses to the eligibility profile in error, please feel free to call us at 888-707-8680 and use the PIN 4263. One of our specially-appointed customer service associates will be happy to assist you in updating your profile.

    Thank you, again, for your interest.

    E*TRADE Securities, Inc.


  • Don't forget...even if they don't charge a "fee" to close an account, they make it up with the interest they get while keeping your money away from you.

    All I know is that I feel pretty screwed by the whole thing.
  • Read the fine print associated with the $75 offer:

    (1) The $75 will post after about 2 weeks.

    (2) The account must stay open for 6 months in
    order to keep the $75.
  • Since this "filter" is 100% on e*trade's shoulders only a total idiot would even THINK about blaming RH. This RH bashing is starting to get sickening. Are they God? Hell no, they are just a company making a quality product. They do what they need to do yet still give back to the Linux community as much as anyone.

    Now, I'm not personally happy with everything RH is doing but that falls under the realm of personal, phylosophical differences. They aren't doing anything anyone could remotely concider as "bad".

    Bottom line: Shut the #&%$ up!

  • I worry that if too many Wall Street types buy Red Hat stock, and not enough people who are passionate about Linux, the company will become a soulless money machine. But that's just fear (it has a basis in fact though remember what happened to Netscape. &ltshiver&gtAOL&lt/shiver&gt) It would also be kind of nice if some of the people who helped Linux take on Windows could make some money, but that's just a secondary concern. Well, just my opinion.
    I would hate to have to leave a garrison behind.. -- Darth Vader, The Empire Strikes Back
  • Can someone who isn't going to join the IPO mail me their username and password? I'm currently involved in a running war with E-trade because they completely refuse to have normal customer service (like read your email dammit), and I'd like this to be the last time I deal with them.
  • This is really funny... It's sooooooo true.
  • Funny, that's almost exactly what I'm planning to do. Send them their miserable $1k, buy however much RHAT is available, then ship it to my preexisting securities account and close the etrade account. The last thing I want to do is deal with etrade -- especially after the trouble it's been trying to get one sodding account open with cash.

  • I have tried to get the form from there, but it didn't work for some reason (it was few days ago), so I called them and applied over the phone. Denied nevertheless.

  • Duh. You don't buy shares on the IPO day. Thats moronic. However if you get a chance to buy the shares at the offer price (in the case of MP3 I think it was around ~24) before they go public then its a great deal. In this case those who got in on MP3.com at the IPO price are still close to doubling their money.

    _That_ is what we are talking about here for redhat.
  • It stands for "Initial Public Offering." It is when a corporation offers some of its shares for the general public for the first time.

    What happens is that the corp gets together with an investment bank. The investment bank starts talking to other institutions, clients, other investment banks and so on in order to judge demand so that an initial price can be set.

    There's an interesting tension going on. The underwriter (usually the prime underwriter will bring in sub-underwriters for assistance -- the combination is called the "syndicate") buys all the shares from the company at the agreed-upon price and in turn sells some or all of those shares to the public at the same price (actually, the underwriter extracts a commission, called the "underwriting discount" IIRC) from the company going public). So if the stock price is set too high, the syndicate will be left holding more shares than it may have wanted because demand wasn't high enough. If the price is set too low, then the company has left money on the table and the underwriter ended up with a lower commission than he could have gotten.

    In practice, IPOs are usually priced intentionally low so that the stock'll pop up on the first day of trading, attracting buzz and making everyone happy.

    Ok. So the price is set, the syndicate buys the stock from the company. The syndicate sells the stock to those people it has decided to sell the stock to (each underwriter has their own criteria, subject to NASD and SEC rules, for making the decision). At that point, those people own the shares and are free to start trading away!
  • Lots of people here are confusing the "invited" group (those who got the email from Red Hat) with the E-TRADE customer group.

    The "invited" group got an URL, username, and password to a place on E-TRADE that isn't linked to from their main page. This group can place their indication of interest _now_, and only competes for shares amongst the other invitees. E-TRADE knows who the email was sent to, so don't bother trying to sneak in.

    Everybody else who's an E-TRADE customer is in the other group. This group *does* get a shot at the IPO, but you have to hit E-TRADE during a two-hour magic window, and then compete for shares in a drawing with everybody else in this group.
  • Is this something they do for IPOs only or for all trading?

    It seems like a Catch-22. If you haven't traded stock before, they won't let you in. How do you get the experience if they won't let you buy your first stock?

  • SEC recommendations carry a lot of weight, as the SEC investigates NASD and NYSE fairly often. If they don't like what they see, they get taken to court. E*Trade cannot afford the risk of being hounded by the SEC, so they follow SEC recommendations.

    It's true the NYSE and NASD are self regulated, but that regulation is overseen by the SEC, which doesn't hesitate to step in when it smells something fishy.
  • Did the same thing this morning, and got the
    form.

    Steve
  • You know it is funny that you would say that. But you have to look at it in the view of a company that needs to establish $$Dough$$. IPO's aren't for people like you and me to get an opportunity to make some cash. If you follow the market, IPO's have only been popular since around '92, when it finally became possible for guys like you and me to even get a piece of the pie. The whole idea of an IPO is to raise cash - and to try to hold on to it and keep the stock price up for as long as possible until it levels off. Any financial institution can be an underwriter for RedHat. Think its a coincidence that Goldman Sachs Inc.(One of the largest Underwriters out there), is backing them? Best believe the three underwriters are coming off with a sweet deal for their services. Well at least Goldman Sachs is. E*Trade probably got the short end of the stick just to have their name included for the advertising. Want to know why companies DON'T want people like you and me included in an IPO? Because they don't want it split up into a million different directions once the IPO is just coming out. Sure it sounds corrupt to favor the big boys who will by in blocks of 100,000 shares and up, but think about it, they have a deadline to reach for their shareholders to see that their interest is worth the investment. It is all about the worth of you company. The higher and quicker it rises, the more people will want to get in it later on. It is all about a company keeping afloat. Just look at companies like Donna Karen and you can see what I mean. As we speak, I am trying to get into this IPO because I think it is going to be the next Netscape in comparison, but let's not forget that after the IPO is over, if the turnout was good, there is still going to be a lot of momentum because of the name and success of the IPO. Even if it ends up at $35, it will still be worth it for the future. Look at Yahoo and Lucent.

  • I got a letter.
    I sent E*trade two thousand of my dollars.
    I got denied by E*trade to participate.

    It makes me wonder if I should have been day trading rather than working on software for the good of the community... Well not really, I know where my heart is.

    This looks like old men and their old money, the haves and the have-nots. The wealthy in this country ensuring only they can participate in making more wealth, in the name of 'protecting us poor shmucks from ourselves'.

    I don't remember any questions regarding how much experience we had in the industry in which Redhat operates, yet this seems to me just as important to know the difference between the GPL and the EULA as it is to know the difference between a short and a margin.

    I do not blame Redhat, and I still plan to buy their stock and hold it. Just give it a few days to settle down to a little over double the offer price. I'll still make a ton of money, although it may be 10X rather than 20X. *grin*

    As for E*trade, I'll be closing my account and transferring my funds back into my Datek account. Given the stringent requirements and the targeted community (open source developers, not known for their affinity to stock trading) it was downright underhanded for E*trade to require submission of funds before allowing access to the elegibility profile. I'm just glad I didn't sell any of my current positions to get in on this.

    -- Greg

    PS: If you've been denied access to the IPO but still itching to participate, according to the IPO elegability FAQ:

    "If you have more than one account at E*TRADE, you can select another account to participate in the public offering and submit an eligibility profile for that account"

    So, close your account, and re-open a new one immediately, then tell them you have a million in liquid assets, been trading options stocks mutual funds and IPO's since you were three, you make over 200,000 a year and your looking for everything from agressive growth to capital preservation. That should get you by.
  • IPO: Initial Price Offering (I think). When the stock for a certain company first goes on the market, this is the price it is announced at. It is usually held for a little while (a couple of days or so), and only those people who are eligible are allowed to buy it at this time. Then it gets released to the public. At this point, the price usually shoots up very rapidly, so anyone who bought at IPO makes a lot of money very quickly (before the general public gets a chance).

    CEO: Chief Executive Officer. The guy who makes all the top-level financial decisions in a company. Responsible for employing just about everyone else (including the president, etc...).
    --
    - Sean
  • Unless the stock goes down, in which case you'd have no profits to redistribute.
  • I'm curious as to what the "invitation" looked like, but it's really, *really* difficult to get in on *any* IPO unless:
    1. You work for said company
    2. You are "in bed" with someone in said company
    3. You're conisdered a "qualified investor" (worth millions)
    I've tried getting in on Invidia's (glad I didn't now), Priceline, and Critical Path... I gave up and didn't bother with Be's or Red Hat's.

  • Re:how are they stopping people.... (Score:1)

    by Anonymous Coward
    > Man, that just sounds so corrupt.

    Welcome to the stock market.
  • You have obviously never worked for a financial company. Not only does the SEC have direct oversight, but so do the "self-regulating" bodies. Any one of thes entities can put a firm and/or a person out of business. And it's a damn good thing they exist.

    The E-Trade questionare reflects SEC suggested guidelines of what they call (and this is a standard industry phrase) the "sophisticated investor". And if the public were left without these protections, there would be quite a lot MORE fleecing going on.

    Noah

    previously a registered NASD Series 7 & 63
  • I don't understand, what can I do? If anybody knows a way around this, let me know.

    Lie. It should be obvious from the form what the desired answers are. (Hint: yearly income $15K and 0 years investing in stocks won't get it :-))


  • Won't work; it's apparently your e-mail address that's important; the all the ids/passwords are the same or similar.

    --

  • Uh uh dljdirect requires [dljdirect.com] :
    investors who maintain a minimum of $100,000 in total account assets aggregated under the same DLJdirect account(s) ID.
    This is more restrictive than E*Trade afaik! (I was able to get in the Salon IPO (ok I'm actually loosing money on it as it is trading below ipo price, so that might be why I got in 'easily'...) with Etrade while I unfortunatly don't have 100k in stock).
  • Because the people who are "making money for you" are also trying to make money for themselves. They have a vested interest in getting you to invest in funds their companies manage as well as stocks that their companies hold.

    Well of course you have to follow the money. Most brokers get paid per transaction, but there are other financial consultants whose fee is a percentage of the value of the portfolio they are managing for you. Therefore, they make more money if the value of your portfolio goes up: their incentive is tied to you making more money, which is exactly the right thing.

    I'm a big fan of delegating to experts.

  • Yeah, like the car dealership not selling you the car on pretense that you must be 36 to own one. Except, as everyone knows, there is no such law. Yeah, Redhat isn't responsible, but E-Trade certainly is!

    Here's what happened to me: Got the letter, transferred my existing brokerage account from TradingDirect to E*Trade, only to learn later on that "securities industries regulations" prevented me from participating because of my nationality. This information was not given to me prior to transfering my account despite a specific question about the subject. At E-Trade, I not only pay higher transaction fees than I did at TradingDirect, but I also get a worse service (no limit prices expressed in 1/32), for no compensation (the possibility of doing IPOs was a lure)

    Puzzled, I called the SEC at 202 942 7040. There I spoke to Mr Jack Hardy, who confirmed to me that no such regulation exists. Apparently E*Trade is just limiting eligibility for their own convenience, and are cowardly hiding behind phantasy regulations.

    Actually, by claiming the existence of these phony regulations, E*Trade may not only be misleading potential investors, but they may also be misrepresenting the SEC's position. Mr Hardy recommended me to fax a written complaint to 202 942 9634 (attn. Jack Hardy) and cc it to 650 331 6806 (attn. Henri Carter, Vice President of Compliance Department E*Trade Securities Inc.), which I did. So far, no change yet apart from a clearer message on their subscription page. However, I noted that the deadline has been moved to August 4th. This gives us another week, and if enough people make their voices heard, the SEC might lean on E*Trade hard enough to get us furriners our part of the cake too.

  • If you know what you're doing, and spend the time to do the proper research on companies you're investing in, there's no reason to pay someone else for advice.

    And if you know what you're doing, you'll never need to buy software, you'll just write your own. And if you know what you're doing, you'll never need to take your car into the shop, you'll just fix it yourself.

    Not everybody wants to be a full-time trader. Not everybody wants to spend their time being a slave to their money, and thinking about it all day. Some people just want to hire someone who knows what they are doing, and then ignore everything but the bottom line: ``how many pizzas can I buy today?''

  • I had correctly told E*Trade that I earn $125K+ a year, and I have about 60K in liquid cash. They did not want my money.

    I told them to close my account, and mail my check back. I was ready to invest in at least 1000 shares. They said that they'll send it back on August 10th, because they allegedly have to wait for my initial check to clear first.

    That's ok, because I have plenty of more cash to invest, in the mean time.
    --

  • The rich get richer and the poor get poorer. I thought about buying Redhat too. I'm too young and don't have the contacts. Everyone knows the stock will go way up. But of course, you already have to have a million dollars to turn it into 100 million. It's not possible for for the average joe to invest in a company they like. I say to hell with all of these overpriced technical stocks, like Yahoo, a searchable index, go figure.
  • >Goldman doesn't open accounts for less than

    >500,000 I think. Might be higher now.

    yes, actually it's 5,000,000 USD now. So I think you can forget about getting an account at Goldman ...
  • But it is true that they are really only attempting to protect inexpereiced invenstors from being screwed.

    My response to that was simply: fuck you.

    I have 60K in liquid cash, and I earn a six digit salary, and I do have some trading experience.

    E*Trade blew me off, so I told them to mail me my check back.

    I would really want to know how many open source developers would actually qualify under E*Trade's guidelines. Not many, I bet, which would make Red Hat's offer a complete sham.
    --


  • Apparently etrade has the list of email addresses from Redhat. If the email address listed in your etrade account doesn't match, you're denied.

    Initially, mine didn't match. (I signed up with an address that was different from the one RedHat used.) So, I couldn't get to the page. I went and changed my preferences to make the email addresses match, and now I can get to the page, only to be told that I don't qualify.

    I can afford to lose this money, it's my money. I am not thrilled about etrade deciding what is and is not appropriate for me to do with it. Assuming that this situation doesn't get resolved, I'm getting my money back from etrade and taking it elsewhere. This is annoying.
  • ...liquid net worth over $50,000...

    Wrong. I have much more than that in my bank account, and E*Trade still blew me off.
    --

  • Yeah, I put my $50+K in too.
    The thing that gets me about this is, on my other (full service) account (at another broker), I've got them promising to get my shares when they're offered (up to $100K), but on E*TRADE, they won't even let me get put on the list. I'm willing to pay for a phone call to get the shares ...

    Will in Seattle
    at least I get interest on the money
  • I did. I talked to them on the phone. The IPO is open to anyone who has received the invitation.
    --
  • Exactly. They sure treat you better when you've got more than half a million in an account, based on my experience.

    Which is not fair - your money should be as good as my money.

  • Hes right, it has a lot to do with the Lead Underwriters (although i doubt that E*Trade is one of them)
    IPOs are heavily controlled by the SEC- but there is a friends and family clause that lets redhat sell shares at reduced prices
    Perhaps their lawyers didn't consider this or the SEC wouldn't allow it
    Either way- just because you don't get in on the IPO usually doesn't mean much.
    Just pick it up the first day of trading- i'm sure volume will be high.

  • E-Trade probably doesn't have much choice in the matter; all of this is due to SEC regulations, not E-Trade. As a broker, all sorts of nasty things can happen to you if an inexperienced client loses his shirt.

    cjs

  • If anyone from RedHat's reading... (Score:2)

    by Anonymous Coward
    ...d'ya think you could get some of the RedHat brass to pull some strings on this? "Open source software developer" generally does not coincide with "liquid net worth over $50,000" (which is what I heard the eligibility criterion to be). If you really want to give back to the "little guys" who have helped develop the kick-ass software that RedHat's selling, you might consider easing those criteria a bit.

    I'm kinda smoked by the whole deal. I saw the IPO offer as a welcome validation of the principles and spirit of community which have motivated me to expend so much time and energy on open source projects in the first place. And now I feel quite a bit cheated by the whole affair. It would have been better not to get my hopes up in the first place, I think. I hack for love, not money; dangling money in front of my face then yanking it away is just cruel --- an attempted corruption of the soul of this movement.

  • Strange SEC rules, that the SEC even doesn't know (Score:5)

    by cyberdonny ( 46462 ) on Wednesday July 28, 1999 @10:48AM (#1778645)
    Ya know, the odd thing about these supposed SEC rules is that the SEC ignores that they exist...

    Here's what happened to me:
    Got the letter, transferred my existing brokerage account from TradingDirect to E*Trade, only to learn later on that "securities industries regulations" prevented me from participating because of my nationality. This information was not given to me prior to transfering my account despite a specific question about the subject. At E-Trade, I not only pay higher transaction fees than I did at TradingDirect, but I also get a worse service (no limit prices expressed in 1/32), for no compensation (the possibility of doing IPOs was a lure)

    Puzzled, I called the SEC at 202 942 7040. There I spoke to Mr Jack Hardy, who confirmed to me that no such regulation exists. Apparently E*Trade is just limiting eligibility for their own convenience, and are cowardly hiding behind phantasy regulations.

    Actually, by claiming the existence of these phony regulations, E*Trade may not only be misleading potential investors, but they may also be misrepresenting the SEC's position. Mr Hardy recommended me to fax a written complaint to 202 942 9634 (attn. Jack Hardy) and cc it to 650 331 6806 (attn. Henri Carter, Vice President of Compliance Department E*Trade Securities Inc.), which I did. So far, no change yet apart from a clearer message on their subscription page. However, I noted that the deadline has been moved to August 4th. This gives us another week, and if enough people make their voices heard, the SEC might lean on E*Trade hard enough to get us furriners our part of the cake too.

  • I also received the offer letter from Red Hat, begged, borrowed and stole $1500 to open my E*Trade account, and in completing my Indication of Interest I found I was not elegible.

    Well, damn, I don't mean to sound harsh, but if you had to beg, borrow, and steal to get your $1500 (which actually may not even cover it, if they re-price above $15) then why are you even considering this investment?

  • Surely Red Hat wasn't aware that this would be a problem when it offered the shares to the community. It sounds as though this is an automatic response by E*Trade's systems--another example of the problem of letting computers make decisions that should be made by people.

    I think that the likely solution to this problem is attention; once the usual sources--News.com, Wired, Salon, and so on--pick up on this (and we know they check Slashdot regularly), E*Trade will likely right the wrong. I bet it will look strikingly similar to the Yahoo/Geocities debacle once it's over.

  • Re:SEC Requirements (Score:5)

    by Shafik ( 29058 ) on Wednesday July 28, 1999 @07:53AM (#1778660)
    Well you are a bit misinformed. The idustry is not directly regulated at all. The SEC can ONLY recommened they don't have direct control like the FCC does over AT&T. Both the NYSE and NASDAQ are self-regulated bodies. E*Trade has come under pressure by stories of people who have never traded becoming bankrupt to implement stricter checking policies. It was their choice and theirs alone to implement such policies. But it is true that they are really only attempting to protect inexpereiced invenstors from being screwed.
  • they [the market, not e-trade] don't want people jumping in on an IPO and selling off at $50 higher per share, at the end of the day.

    thus, from what I've heard, they're pulling together and choosing candidates through their past trading experience.

    This said, someone who gets in, and immediately sells off like I mentioned before, runs the risk of getting blacklisted.

  • Hardly. Selling immediately is what most of
    the principals in an IPO deal do. The investment banks and all early-round investors (like VCs) typically sell almost right away.

    Getting access to the pre-market (i.e. listing) price on an IPO is a carrot held out by many brokerages for their high-net-worth clients, so that they can make even more money.

    Some other folks have posted (correctly) that what ETrade is doing is enforcing SEC guidelines for IPOs, which are inherently risky. The guidelines protect the individual investor from getting swindled or defrauded, and thus require some degree of experience, plus cash/assets such that IPO "speculation" wouldn't wipe you out, if it were to tank/vaporize.

    Further proof of the axiom, "It takes money to make money".
  • Have you tried opening an account with an are Goldman Sachs?
    They are the lead under-writers after all.

    Plus, you will not have to go through an automated system in order to get the shares that you have been offered.
  • It's more like RedHat offering you a car through a dealer, but the dealer finding out you're underage. No car. Redhat isn't responsible, they did what they could for you, the laws guiding the item that they offered you won't allow it, and Redhat has no way of knowing beforehand who is ineligible. You should take it two ways:

    1) It's a nice gesture for those who've reported bugs in the past
    2) RedHat wants their stock to go way up, so why not invite extra people to participate who normally wouldn't trade stocks? We're not above that sort of thing...

    -Adam

  • No surprise... (Score:4)

    by SpinyNorman ( 33776 ) on Wednesday July 28, 1999 @08:11AM (#1778707)
    From "The Letter":

    All applicants for public offering stock will be required to submit and
    pass an online eligibility profile at the E*TRADE web site. Public Offerings
    are considered speculative investments and therefore you will be required to
    answer a series of questions about your Investment Experience, Goals and
    your Financial Background.


    Perhaps RedHat could have emphasized this more, or pointed out that it's an SEC regulation.

    If they're going to screen on these criteria (as they have to), then it should be obvious what sort of answers they're looking for. For example, If you say your investment objectives are income or capital preservation, then you shouldn't be surprised if they think you shouldn't be investing in IPOs. Obviously they have no way of checking your answers anyway, but by asking they've satisfied the SEC and covered their ass in the event that you lose money and feel like trying to blame them...

  • I just received this in my inbox (bcc).

    Subject: interview for Wired News

    Hi--I'm a reporter from Wired News working on an article about RedHat's
    offer to sell shares at the IPO price to members of the open source
    community. Judging by the thread and poll on slashdot, and some e-mails
    I've gotten, there's some concern about getting access to the offer.

    If you have a minute, I'd like to talk to you about this. I can be reached
    at 415-276-8472, or e-mail me with a number to reach you at.

    Thanks,

    Polly Sprenger
    Wired News
  • IANAL, but I'm pretty sure you can't sue the govt unless they give you permission to sue them.
    However, in this case the SEC is not preventing you from making the trade. E-trade is.

    However you are also not likely to be able to win a lawsuit against them either. They are most
    likely operating under what is know as a 'safe-harbor'.

    A 'safe-harbor' is a way that companies protect themselves from silly lawsuits. Basically what
    this means is a regulatory agency (like the SEC) say you should operate in a certain way. If the
    company does it that way, the company has a built-in defense in saying "hey we didn't cause
    intentional harm", which means any chance of big lawsuits is out.

    Part of the SEC 'safe-harbor' provisions for IPOs are that the IPO share must be distributed to both
    large and small investors, and that investors don't bet too much of their net worth on the IPO,
    and that the investors know what they are getting into (hence the experience factor).

    E-trade is probably complying with these 'safe-harbor' provisions, so any lawsuit is unlikely
    to succeed (since you would have to prove they directly discriminated against you instead of
    it just being a consequence of their actions).

    Keep in mind, there are only so many shares to sell. In any "fair" scheme, many people will get
    left out in the cold.
  • No, it doesn't.

    RedHat has no control over what e-Trade's rules are. And RedHat warned that there were rules.

    e-Trade seems to be doing something a little off by accepting deposits to open accounts that can't be used for the purpose for which they were opened. But if they offer to close the account without charging a fee, then I don't see any reasonable beef with them. Other than, possibly, a philosophical point that they shouldn't be protecting you from yourself.

    I'm not sure whether e-Trade's rules on who can buy into an IPO are dictated directly by the SEC, but I strongly suspect they are at least "encouraged" by the SEC.

    Stock markets are kind of ugly for libretarians. Lots of rules, many of which make little sense taken one at a time or in any particular special case. But those rules make the market. At the very least, the rules increase the value of the market. For example, without the very goofy-feeling insider trading restrictions, insiders would have so much advantage in trading that it would be foolish for those without such an advantage to trade, and the market capitalization of a company would be limited to the wealth of the insiders.

    Anyway, IPOs are quite risky. It is easy to lose most of your stake, even if the company is very good. The investment industry doesn't want you (or your idiot brother who would bet next month's rent that RedHat, being such a cool company, is a guaranteed great investment) going broke - that's bad for business, you won't be investing any more. The online companies don't want you going broke - that's bad business AND bad publicity and invites severe regulation. With an actual broker, you would be dealing with someone who can make a judgement call that this particular move isn't going to ruin you. The software isn't up to that.

    You can lose your shirt on regular investments, but it's harder to do and takes longer. And playing markets as a form of gambling is kind of silly. Yes, there is risk involved, but the game has a positve sum. Both you and the house can win. Take it seriously and pay attention, and you can make some serious $$.

    Lastly, e-Trade is probably doing the right thing in most of these cases. An IPO is not a good introduction to securities trading.

    (DISCLAIMER: I'm not a securities expert. This is not advice. Ya can't sue me.)

    Fear my wrath, please, fear my wrath?
    Homer

  • E*Trade should have known better (Score:5)

    by jaypifer ( 64463 ) on Wednesday July 28, 1999 @08:39AM (#1778741)
    E*Trade has a legal obligation to "know their customer" because they are a registered Broker/Dealer. Because of their obligation they have to qualify customers who are purchasing stocks, options, etc. I'm sure if E*Trade could sell you pieces of the clear blue sky, they would and still get a commission. Thankfully, the SEC regulates brokerage firms to prevent them from doing this.
    As for your qualification, when you initially opened the account they probably asked you all of those questions anyway to try and qualify you for options, etc. With that information they could have gleaned that you weren't a likely candidate and shouldn't have sent you the letter. (hopefully they have this type of cross referencing in place) Otherwise it sounds like you opened a cash account instead of a margin account and they didn't have the info they needed to qualify you as a registered investor. Once they (E*Trade) were able to determine this they *had* to decline your request or you could take them to arbitration (and get money) because you could say that E*Trade should have known better than to sell an IPO to an inexperienced investor.
    How do you get around this? Either start investing more and gain the experience or....lie. The brokerage firm has no idea if you are lying and really doesn't care as long as you have signed a contract stating that you are experienced. Brokerage firms do not have access to other firms trading records. Thus you could tell them that you play Butterfly spreads and foreign currency sythetics for fun and they have to believe you.
    Red Hat has no clue who their IPO is being sold to. All they know is that E*Trade bought XX Million shares and E*trade is selling that many shares to customers. Do not be angry at Red Hat for a screwy system for IPOing securities. =)
    ...and lastly, since I'm at work and should really do something so they keep paying me. E*Trade is not the only one which is selling the IPO. Goldman Sacs is the primary underwriter. Of course you may have issues with their commissions.........

    Jayson Pifer

  • I didn't get the letter but ...

    Why are they trying to protect me?
    I'm over 21, and it's my damn money, if i want to throw it away on some stock certificates that might become useless, that should be entirely up to me..
    Secondly the only one suffering if I mess up with the IPO investment is me, i pretty much game my money away .. so what it's MINE

    rant off :-)
    Gerard Saraber
    http://saraber.dhs.org

  • I've had an E*Trade account for a while (yes I know better, but once upon a time E*Trade was the only/cheapest game in town). Anyway, if you want to get in on an IPO here's how it works:

    • Open an account. Put money in it.
    • Now, it helps to have traded on E*Trade before because it will presumably give you a better chance of getting in an IPO - however if you got a letter your experience should not matter. If you didn't get a letter, don't open an account and daytrade to get experience. That will probably just look worse. (Flipping on IPO's will ban you from future ones.)
    • Once the account is open you need to hang out in their "IPO Center" and keep looking at the "Current Offerings.". Red Hat will appear on there at some point. That means you can fill out a form stating the intention of wanting to get in on the IPO.
    • At that point presumably if you got a letter you will automatically get approved. Otherwise, E*Trade will use things like your current acct. balance, past trade activity, and the amount of shares you want to buy versus the total left to determine if you can get in.
    • You cannot margin your current account to place an order for an IPO. This is to cover E*Trade's butt.

    E*Trade sucks. Open an acct with Datek for normal trading.

  • Re:how are they stopping people.... (Score:3)

    by rlcarr ( 71695 ) on Wednesday July 28, 1999 @09:03AM (#1778761)
    Absolutely.

    When a company goes public, it actually sells its shares to the underwriting syndicate who in turn sells it to their friends and customers. Both these sets of sales happen at the IPO price.

    As a co-underwriter, E*TRADE has some number of shares alloted to it, that it can sell as it pleases. E*TRADE's standing policy is to sell 50% to its customers and the other 50% to anyone else, presumable institutions.

    The other underwriters can do something similar. Chances are, a lot more of their shares will go to institutions than customers.

    To make a long story short, unless the members of the syndicate sell allot shares to brokers outside the syndicate, no other brokers will be able to offer a piece of the IPO.

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