Trader Talk

Wells Fargo's Controversial Opening

Wells Fargo successfully launched its $10.6B common equity offering to repay TARP money, but not without some controversy, not of their own making.

The WFC opening was held up for 50 minutes--not due to the fault of the NYSE, but the book runner, Goldman Sachs , held up the open to allocate the 425 m shares. Floor traders, who have no love for Goldman, were irate that it took so long.

Goldman spokesman Lucas van Praag, in an emailed statement to me, said: "The offer was marketed overnight. Books closed at 9am. The deal then had to be allocated globally including to over 400 institutions. We wanted to be sure that the allocation process was completed before trading began to ensure that this very large offer began trading properly."

Regardless, the stock traded almost 80 million shares away from the floor in the 50 minutes prior to the NYSE opening.

Why not just halt all trading in the stock for a News Dissemination? This is something only the company can do. For whatever reason, that did not happen.

The NYSE, for its part, issued this statement from spokesman Ray Pellecchia: "We held the opening until the underwriting process was complete, so that all interest could be reflected in the opening price." 



Questions?  Comments?