Just two years after a taxpayer bailout salvaged General Motors, some of the nation’s largest retail brokerage firms are apparently being shut out of what is poised to be a lucrative investment opportunity as the auto company goes public.
Charles Schwab [SCHW 15.02 -0.09 (-0.6%) ], TD Ameritrade, and E*Trade are not accepting client orders for GM shares at the moment because they do not expect to receive stock allocations when the company goes public next week, according to investors and brokerage-firm employees.
Other big retail brokerages, such as Morgan Stanley [MS 25.72 -0.59 (-2.24%) ], are expected to get shares, however, as are big institutional investors and hedge funds.
Charles Schwab [SCHW 15.02 -0.09 (-0.6%) ], TD Ameritrade, and E*Trade are not accepting client orders for GM shares at the moment because they do not expect to receive stock allocations when the company goes public next week, according to investors and brokerage-firm employees.
Other big retail brokerages, such as Morgan Stanley [MS 25.72 -0.59 (-2.24%) ], are expected to get shares, however, as are big institutional investors and hedge funds.
“TD Ameritrade [AMTD 17.1588 -0.2012 (-1.16%) ] will not be participating in the GM IPO offering, as we have been informed that we will not receive an allocation of shares,” said a company spokeswoman in an e-mailed statement. “We have several relationships with various underwriting firms for various products, and in this case the underwriting firm is not allocating shares for this offering.”
Schwab has taken a similar position, according to a source there and an investor who sought GM shares. And with just a few days before GM shares are expected to price on the evening of Nov. 17, a notice posted on E*Trade’s [ETFC 15.05 -0.28 (-1.83%) ] investor web site states that there are no “current offerings” of IPOs available to customers at this time.
The lack of available shares is a disappointment to some potential retail investors, who are frustrated that, after federal TARP funds helped a struggling GM in the depths of the financial recession, they may not be able to participate in what is expected to be a good money-making opportunity.
“I really like the GM IPO, I think it’s going to do well,” says Anand Marphatia, a 51-year old father of two who in Houston who lost his job in the recession and now invests using a Schwab account. He says his requests to Schwab for GM shares have been rebuffed: “I’d like to get in, and I can’t.”
GM’s IPO shares are widely expected to price at a level above the $26 to $29 range that has been listed in the company’s offering documents, and many investors expect even a higher share price to trade up in the aftermarket. Mutual funds, hedge funds, and some sovereign-wealth funds are expected to receive the bulk of the shares on offer next week. But some acknowledge that they are unlikely to get stock allocations as large as they would like.
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