Answer:
Under FINRA rules, this is:
A conflict of interest.
Step-by-step explanation:
The underwriter has advised on the potential acquisition and is now offering the shares to the officers of the manufacturing company that hired the underwriting firm. The underwriter should have allowed the officers of the manufacturing company to purchase the shares on their own since it is a public offering and not a private placement. The information is already in the public domain. By offering the shares directly to the officers, it looks as if the underwriter is trying to compensate them for the contract it received earlier.