Why did Google pop? (II)

According to David Garrity, a technology analyst in New York with Caris & Co.:
It was supposed to democratize the process and let people buy in at just a few shares, but it was a miserable failure because the organizers didn’t realize the securities regulations that require people who bid to have a certain net worth. (From Wired News.)
So, assuming that Garrity has his facts right, this is probably the Qualified Investor rule, which requires that an investor in a non-public stock have a net worth of more than a million bucks, or income above $250,000. Its not always enforced, but when it is, in the IPO process, its one of the few rules that literally help the rich get richer. The rules got a fair bit of public notice when Linux companies started going public, and offering friends and family shares to coders who contributed to Linux. The coders, by and large, were not rich, and several banks promised to ignore lies they told on their QI attestations.
Now, is this a $210 million dollar error? Quite possibly. One of the problems discussed has been lower-than-expected participation. Given Google’s exceptionally low fees (expressed as a percentage of the deal size), its possible that they’re getting bad service from their banks. That also fits with the unregistered stock not being discovered. I can more easily see a banker not stressing a point like this than I can see them spending tens of millions to send a message.
Other commentary from Gordon Smith argues that it was a move to manage securities litigation.
[Update: SamaBlog accurately points out that the law is there to protect people from high-risk investments. I should have said that, and made clear that I’m discussing the unintended consequences of the law here.]

Why did Google pop?

So Google popped 18% today. That shouldn’t have happened. The goal of their much-discussed auction was to ensure that they made money. The typical bubble IPO involved a “pop” of as much as 100-300% on opening day. This put huge sums in the hands of bankers and the bankers friends, sometimes illegally. Ideally, Google’s trading should have been at about 85 today, because anyone who wanted to pay $100 for the stock could have paid $85 yesterday. So what happened?

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