I quote Kerry1, “My agent will only let me place an order if i have the cash for it.” Thus, larger accounts have the cash on hand to inflate their orders to a much higher level than smaller accounts, this allows them to crowd out the smaller accounts on IPO’s and if you don’t think this happens or that people were “smart enough” to do it on the GOOG IPO, it happens all the time. They use the assets available to them to inflate the bid and indicate excessively high demand knowing that they will probably only get 1/3 of what they asked for. In essence large accounts use their size to buy their bids.
And I’m not arguing I was right in terms of CFA ethics, just that we do have a fair point here, whether or not the CFAI has chosen to address it.