Underwriter Not a Fiduciary of a Security Issuer

February 28, 2012
The New York state appellate court recently ruled that the lead underwriter in an initial public offering does not owe a fiduciary duty to the issuer of securities to disclose conflicts of interest in connection with the pricing of the securities, unless the two parties have a distinct relationship of higher trust that arises apart from the underwriting agreement. This update discusses the ruling and how underwriters can minimize the risk of being labeled a fiduciary.