IPO Investing Glossary

IPO University

Penalty Bid

To discourage individual investors from quickly selling IPOs, some brokerage firms impose a penalty bid on the individual broker if his client sells an IPO within a certain period of time. Thus, a broker who would incur a financial penalty if a client wants to quickly sell an IPO has a built-in conflict of interest. The SEC requires brokerage firms to disclose penalty bids.


Start Your Trial:

Enjoy IPO Pro® FREE for 7 days.

Start Free Trial

Icon 1 Get FULL Feature Access

Icon 2 Instant Data on 100's of IPOs

Icon 3 No Contracts, Cancel Anytime

"Risk comes from not knowing what you are doing"
Warren Buffett

IPO Investing Done For You

Our IPO ETFs seek out the most important newly public companies.