Secondary Distribution

An organized offering of stock already issued and outstanding. Typical sources of large blocks of stock for redistribution are corporate founders, insiders, and major investors. If the block involves letter stock and if the volume is large compared to average trading volume, then a registration statement must be filed with the Securities and Exchange Commission. In cases requiring a full registration, the corporation involved usually offers a comparable quantity of new shares for its own account. In cases involving listed securities and where no registration statement is required to be delivered with the shares, the secondary distribution can be handled as a stock exchange distribution. In either case, the distribution is usually handled by a syndicate, which is organized by the lead investment bank, and trades are initiated in the open market to stabilize the price of the publicly traded shares while the offering is underway.