
Corporate Governance | 447
At the same time, the big banks which are both the relevant markets as well as
the underwriters, appear to use their market power over secondary trading activity
to dominate the primary markets for new issues and the underwriting process in
most instances. The banks are said to underprice new issues to assure ‘success’, and
also charge relatively high underwriting fees. And their combined positions as major
stock holders, creditors, and underwriters provided them with an opportunity for
insider trading, which was not legally prohibited until 1994.
Disclosure standards in Germany are also not up to the US standards. The ...