tokens: Whenever a company makes the decision to go public , its first task is to select the underwriters . Underwriters act as financial midwives to a new issue . Usually they play a triple role : First they provide the company with procedural and financial advice , then they buy the issue , and finally they resell it to the public . Established underwriters are careful of their reputation and will not handle a new issue unless they believe the facts have been presented fairly . Thus , in addition to handling the sale of a company ’ s issue , the underwriters in effect give their seal of approval to it . They prepare a registration statement for the approval of the Securities and Exchange Commission ( SEC ) . In addition to registering the issue with the SEC , they need to check that the issue complies with the so-called blue-sky laws of each state that regulate sales of securities within the state . While the registration statement is awaiting approval , underwriters begin to firm up the issue price . They arrange a road show to talk to potential investors . Immediately after they receive clearance from the SEC , underwriters fix the issue price . After that they enter into a firm commitment to buy the stock and then offer it to the public , when they haven ’ t still found any reason not to do it .