Letter Security (Noun)
Meaning
A stock or bond that is not registered with the Securities and Exchange Commission and cannot be sold in the public market.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The company issued a letter security to a private investor, allowing them to purchase a large block of shares without registering with the SEC.
- Letter securities are often used by companies to raise capital from private investors without having to comply with the strict disclosure requirements of the SEC.
- The hedge fund manager invested heavily in letter securities, hoping to earn high returns from the private placements.
- The letter security agreement included a provision that prohibited the investor from selling the shares to the public for at least two years.
- The company's use of letter securities allowed it to avoid the costs and regulatory burdens associated with registering its securities with the SEC.