how western accounts work
the western account is one of the ways that underwriters seek to manage the risk associated with bringing new securities to the public such as in the case of an initial public offering ipo these transactions are inherently risky for the underwriters involved because they are required to pay a certain amount of money to the issuer of the security regardless of the price at which those securities can then be sold to the public the profit of the underwriter is based on the spread between the price paid to the issuer and the price ultimately obtained from selling the new securities to the public to mitigate this risk underwriters generally conduct new issuances in collaboration with one another this creates what are known as underwriting consortiums 