penalty bid

Penalty Bid

An offer to buy the security offered in an IPO with the guarantee that the buyer will retain the security for a certain period of time. If the buyer sells the security before the time is over, the underwriter offering the security assesses a penalty on the buyer's broker, who may or may not pass the penalty on to the buyer. Usually the penalty is equal to the broker's commission on the trade. Underwriters accept penalty bids during an IPO to prevent the price of the security from declining through a sell-off.

penalty bid

A financial penalty sometimes imposed by the underwriter of a new securities issue against a broker whose customer(s) sold shares of the issue immediately after purchase. Penalty bids are imposed in order to keep the price of a newly issued security from declining.
References in periodicals archive ?
Leonard saw his next long-range penalty bid dip under the bar then made amends to put his team in front midway through the half.
Parks was centre stage again in stoppage time with another penalty bid but his sclaffed strike just about summed up Scotland's day.
In a dramatic finale, Neil Thomas made a splendid stop from substitute Ian Dawes before defender Paul Addo received a red card - and Thomas saved a Lee Furlong penalty bid.
The tension level rose when Godman squandered a penalty bid at the other end - and quickly Pienaar completed his treble.
The former MLS goalkeeper of the year guessed correctly, diving to his left to poke away Preki's penalty bid in the fifth minute of stoppage time, preserving a 2-1 victory over the Western Conference leaders.
Utterson, who had just been short with a long-range penalty bid, struck the conversion well enough but the angle was just too demanding for him to score.
Warlow was off the mark with another penalty bid, only to see Hayes confidently thump over two at the other end.
Predictably, Scotland's Rome hero Brendan Laney took over the boot duties for the home troops and kept them in the hunt by confidently slotting his first penalty bid.
One regulatory concern related to CEFs is the potential for brokers to earn high fees at their customers' expense by soliciting their customers to purchase CEFs at the IPO and then later, after the expiration of the penalty bid period, recommend that customers sell the CEFs, often at a loss, using the proceeds to purchase yet another CEF at an initial offering.
TENSE Weir sent his next penalty bid wide but again there was quick amends by his mates as they carved out a third score, Grant completing his double after Matawalu's sniping set up Moray Low to supply the killer pass.
But there was no way back once Stephens increased the lead seven minutes from time, making no mistake with his second penalty bid following another foul by Steve McGowen.