Municipal Bond Forum
New bond issues
Q
I am unable to determine how I can purchase municipal bonds during the “initial offering period” when the purchase fees are paid to the initial seller. It appears that the brokers are now buying up the bonds for their own accounts and then selling them back to their clients at an additional fee. I consider this double dipping and taking unfair advantage of their clients! How do I prevent this? What system and procedure is necessary?
A
James A. Klotz responds:
Your broker should be willing to take your order for a new bond issue if his firm is involved in the underwriting syndicate. If your order is submitted during the “order period” and the bonds are available, you will receive your bonds at the original terms. If it is a “hot issue” and the order period is “oversubscribed,” larger orders will take precedence and your order may not be filled.
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