Western Account Law and Legal Definition
Western account is an offering agreement of a new issue in which each underwriter in a consortium of underwriters is liable only for selling its allotted amount of the new issue. An underwriting firm is not liable for placing unsold portions of the issue from other underwriters. For instance, suppose an underwriting firm is responsible for placing fifteen percent of an issue and does so. If the entire issue is not placed, the firm is not responsible for placing any of the unsold portion of the issue. Once participants have met their previously agreed upon target allotment sale, their liability in the offering is completed.
A Western account is also known as a divided account, as the share of liability is divided among the underwriters by the size of their allotment of the investment vehicle. This contrasts with an Eastern account, in which the whole syndicate of underwriters is jointly and severally responsible.
