"off the board" offering of a previously issued security from an investment institution, acting as underwriter or as selling investor, to other members of the exchange on which the security is listed. Sales of this nature are usually block sales. Allowing such a sale to take place on the exchange floor might severely lower the price of the stock. Certain block dispositions require SEC sanction.
public sale of previously issued securities held by large investors, usually corporations, institutions, or other affiliated persons, as distinguished from a new issue or primary distribution, where the seller is the issuing corporation.
public sale of previously issued securities held by large investors, usually corporations, institutions, or other affiliated persons, as distinguished from a new issue or primary distribution, where the seller is the issuing corporation. As with a primary offering, secondaries are usually handled by investment banker, acting alone or as a syndicate, who purchase the shares from the seller at an agreed price, then resell them, sometimes with the help of a selling group, at a higher public offering price, making their profit on the difference, called the spread. Since the offering is registered with the Securities and Exchange Commission, the syndicate manager can legally stabilize-or peg-the market price by bidding for shares in the open market. Buyers of securities offered this way pay no commissions, since all costs are borne by the selling investor. If the securities involved are listed, the consolidated tape will announce the offering during the trading day, although the offering is not made until after the market's close. Among the historically large secondary distributions were the Ford Foundation's offering of Ford Motor Company stock in 1956 (approximately $658 million) handled by 7 firms under a joint management agreement and the sale of Howard Hughes' TWA shares ($566 million) through Merrill Lynch, Pierce, Fenner & Smith in 1966.
A similar form of secondary distribution, called the special offering, is limited to members of the New York Stock Exchange and is completed in the course of the trading day.
