I bought pre-IPO shares of a company through my Rocket Dollar account. What to do once they IPO?

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The company conducting the Initial Public Offering will send communications about your IPO servicing teams. You should work with one of these teams to electronically register your IRA as an owner of the shares so you can trade them.


Step-by-Step Process: 

  1. Every IPO (Initial Pubic Offering) has a small group of professionals they assign you at the IPO servicing firm. Your IRA will get a letter saying “you can onboard, service, and trade your IPO shares at Merrill Lynch, Goldman Sachs, and Fidelity with their contact listed below” The IPO service teams should know how to open an LLC trading account. There is usually no flexibility past that because only those teams know and have permission to onboard specific IPO investors. These brokers are set by the company that is issuing stock.
  2. Once you see this letter you need to call one of the IPO brokerages and ask them to create a brokerage account in the name of the LLC. Then you will have an electronic portal so you can log in and trade on IPO day or after some lockup period they assigned you.
  3. Never involve your personal taxable brokerage, and make sure the IPO team always titles all documents in the name of your Rocket Dollar IRA LLC. In the future, you could sell the shares or transfer the asset to another IRA retirement account if the IPO firm allows you to. This process is much easier post IPO. 


What is an IPO?

IPO stands for Initial Public Offering. An IPO starts when a private company issues shares of stock to be sold to the public, which then means the company would no longer be privately owned, however, it is owned by investors who have a certain amount of the company’s stock that they acquired while it was in the private markets. One of the main reasons why a company chooses to do an IPO is to acquire a large amount of capital, and they do this through a series of steps: 

  1. They obtain approval by writing something called an S-1 document to the SEC.
    1. For a company to go public and do an IPO it must first get the permission of the Securities and Exchange Commission (SEC) by writing an S-1 document which basically is a book about what the company is doing and why. 
    2. Next, the company must get shareholder approval. Since the company is privately owned before an IPO the private investors will use the S-1 document to gather relative information. The investors will vote on whether the company goes public or not. 
    3. The company chooses the exchange it will electronically trade on and determine its trading symbol. Determining the exchange is an important aspect for developing a successful IPO, this is mainly because of market perception, and how the public/market perceives each exchange. The company also selects a few brokerages that will service IPO investors. These organizations will be different from Rocket Dollar. 
    4. Lastly, the next step is to raise money from the IPO through a process known as the roadshow. During this process, the company makes presentations to big investors to sell their stocks in large quantities at the IPO price so on the morning of the IPO, the big investors start selling/trading their shares at the public exchange, thus controlling the offering price in the IPO.
    5. The company is now public and trades on one of the electronically enabled major capital markets. It is now much more accessible through your traditional stocks and bonds brokerage. At this point, you could buy more shares on the open public markets, or if you were a private investor that purchased the shares through your Rocket Dollar account, you can sell your shares so someone else may acquire them on the public market, assuming you have completed the steps above. 


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