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*Extra* Readers Share Online IPO Experiences

Last week's column mentioning just a few IPO services brought a flood of mail.

Now it's clear what pushes your buttons.

Two weeks ago this

column talked about online dividend reinvestment plans, and the response was a grand total of three fairly thoughtful notes.

Last week the subject was online initial public offering services, and I'm still sorting through the tidal wave of criticisms (of errors real and imagined), complaints about the services, and tips on exploiting them. Since many of you are veteran online IPO traders (to the extent a year-old market can be said to have veterans), you've raised some important points. Among them:

Wit Capital


now allocates shares via lottery, not first come, first served. OK, OK, my mistake. Wit was the only one of the four companies mentioned in the original column that didn't return my call, and I missed the fact that it had switched methods a few weeks before.

"Here's what they actually do," writes

Bill VanAlstyne

. "When a new issue is posted, email messages are sent out to everybody on their subscriber list. The email message (as well as the Web page on which the stock offering is posted) gives the 'window' time frame, usually about 12 hours, in which people who express interest will all be treated as having equal priority.

"Since anyone who is really serious about getting IPOs through Wit is checking their email and/or the Wit Web site at least several times daily, pretty much everybody is going to get their indication within that rather broad 12-hour window if they're interested. If the number of people who get in within the initial window exceeds the allocation, then the allocation is distributed on the basis of a lottery."

One other mistake to correct:



requires just $1,000 to open a basic account. The $2,000 minimum mentioned in the column is for a margin account (which is what most


readers will want to open). All other minimums in the column were for basic accounts.

Several other companies offer online IPOs. "What about




Charles Schwab



Waterhouse Securities

?" was a typical response to the absence of a favorite broker. And don't, says

Philip Herring

, try to plead lack of space: "I've heard the 'space consideration' from other


columnists ... Sounds like a



The column wasn't meant to be comprehensive, but I can understand how a user of an overlooked service might feel slighted. So here are four more sources of online IPOs, mostly in the words of happy customers:


is the online affiliate of

Donaldson, Lufkin & Jenrette


. There is no minimum to open a basic account but $100,000 to get a piece of an IPO.

"Not only has


executed a partnership with them, but

DLJdirect also has one of the more equitable selection processes of all of the online firms," says Herring. "No lottery system, no Dutch auction, no directly stated policy on flipping, and many past, current and future deals (good ones might I add -- including


). It also is under the umbrella of an established and proven powerhouse in the Internet brokerage world! Although the account minimum may be heftier than the other online firms' ($100,000), I have managed to get a piece, albeit small, of EVERY deal I have subscribed for (but I haven't flipped one yet!). Now that's what I (and I would think most) investors are looking for."

Charles Schwab


offered IPOs for over a year, including some popular tech companies such as



but also the likes of

Polo Ralph Lauren

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," says

Phillip Senderowitz

. "I'm surprised that you would overlook one of the largest players."

Waterhouse Securities

"has offered IPOs on a VERY limited basis for some time," says

Richard Ranney

. "I was offered one over a year ago. The first one to be made available under the new online system appears to be Waterhouse's very own IPO. As you may have heard,

Toronto Dominion Bank

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, which owns Waterhouse Securities, is spinning 10% off to the public. Waterhouse customers with at least $50,000 in equity and who have made at least four trades in the last year will be eligible for shares at the offering price. There appears to be a limit of 1,000 shares per account."

TheStreet Recommends



, an Internet company incubator, "is going to offer its shareholders the right to purchase shares of companies it takes public at the IPO price," says Chad Burnette. "The first two companies slated for this deal are

Engage Technologies



, both highly anticipated IPOs. As a shareholder of CMGI and as a person frustrated by the hoarding of IPO shares by large buyers, I am very excited by this development."

The meager number of available shares is either a horrendous drawback or no problem at all.

Mike Barrett

brushed aside my statement that "the


(STRM:Nasdaq) and



are reserved for the big investment banks' A-list clients," noting that he got both stocks from Wit and one of them from E*Trade.

But when Monica Huselton tried to buy's


IPO through E*Trade, "it took five tries to successfully complete the online application. I overnighted the required monies and hustled to meet every deadline they gave. ... I kept checking my account the night before the big IPO to see what my allotment would be -- I was hoping to get 10 shares. After the market opened the next day I got my email alert. I had been allotted exactly zero shares. So I got no shares and I got no T-shirt from

, which my friends who are subscribers received because their names did not get drawn to participate in the IPO."

The Wit and E*Trade prohibition on flipping is either the end of the party or a paper tiger. "Since people who want access to future offerings must hold for 60 days, they are often at a disadvantage to those who have more flexibility in the aftermarket," writes

Richard Barg



Tobias Iaconis

, "I have participated in the IPOs of


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Net Perceptions



Mpath Interactive












CAIS Internet




and Wit Capital. When you have the opportunity, take a look at where these stock prices resided on the 60th calendar day of their life in the secondary market: many were close to or below their offering price."

Yet in reality the prohibition on flipping isn't always enforced. "I have been

flipping with both accounts

E*Trade and Wit and I don't get shut out very often," says Barrett. "Now that the IPO frenzy has run its course, you'd have to be pretty foolish (or a true believer) not to take the money on a big initial pop. ... If these firms only gave shares to people that held, then there wouldn't be any eligible accounts. I am living proof."

John Rubino, a former equity and bond analyst, writes a column on mutual funds for POV and is a frequent contributor to Individual Investor, Your Money and Consumers Digest. His first book, Main Street, Not Wall Street, was published by William Morrow in 1998. At the time of publication, he had no position in any stocks mentioned. While Rubino cannot provide investment advice or recommendations, he invites your feedback at