As a sub-underwriter he would be contractually obliged (from his...

As a sub-underwriter he would be contractually obliged (from his own pocket) to take up a portion of any shortfall up to $5M worth. There is typically a fee paid to sub-underwriters, but sometimes management is willing to do so without a fee in support of the stock, or because they are simply happy to acquire additional shares. In my opinion it is preferable when management sub-underwrites because in the event of a large shortfall management is less able and/or less inclined to sell shares than professional underwriters. If the stock falls below the price of the issue then stock held by underwriters is often viewed by the market as an "overhang" potentially putting further pressure on the market price.